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Airport Operator Options for Delivery of FBO Services (2018)

Chapter: CHAPTER FIVE Airport Experiences with Different FBO Models

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Suggested Citation:"CHAPTER FIVE Airport Experiences with Different FBO Models." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Operator Options for Delivery of FBO Services. Washington, DC: The National Academies Press. doi: 10.17226/25039.
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Suggested Citation:"CHAPTER FIVE Airport Experiences with Different FBO Models." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Operator Options for Delivery of FBO Services. Washington, DC: The National Academies Press. doi: 10.17226/25039.
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Suggested Citation:"CHAPTER FIVE Airport Experiences with Different FBO Models." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Operator Options for Delivery of FBO Services. Washington, DC: The National Academies Press. doi: 10.17226/25039.
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Suggested Citation:"CHAPTER FIVE Airport Experiences with Different FBO Models." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Operator Options for Delivery of FBO Services. Washington, DC: The National Academies Press. doi: 10.17226/25039.
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Suggested Citation:"CHAPTER FIVE Airport Experiences with Different FBO Models." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Operator Options for Delivery of FBO Services. Washington, DC: The National Academies Press. doi: 10.17226/25039.
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Suggested Citation:"CHAPTER FIVE Airport Experiences with Different FBO Models." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Operator Options for Delivery of FBO Services. Washington, DC: The National Academies Press. doi: 10.17226/25039.
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Suggested Citation:"CHAPTER FIVE Airport Experiences with Different FBO Models." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Operator Options for Delivery of FBO Services. Washington, DC: The National Academies Press. doi: 10.17226/25039.
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Suggested Citation:"CHAPTER FIVE Airport Experiences with Different FBO Models." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Operator Options for Delivery of FBO Services. Washington, DC: The National Academies Press. doi: 10.17226/25039.
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Suggested Citation:"CHAPTER FIVE Airport Experiences with Different FBO Models." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Operator Options for Delivery of FBO Services. Washington, DC: The National Academies Press. doi: 10.17226/25039.
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Suggested Citation:"CHAPTER FIVE Airport Experiences with Different FBO Models." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Operator Options for Delivery of FBO Services. Washington, DC: The National Academies Press. doi: 10.17226/25039.
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Suggested Citation:"CHAPTER FIVE Airport Experiences with Different FBO Models." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Operator Options for Delivery of FBO Services. Washington, DC: The National Academies Press. doi: 10.17226/25039.
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Suggested Citation:"CHAPTER FIVE Airport Experiences with Different FBO Models." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Operator Options for Delivery of FBO Services. Washington, DC: The National Academies Press. doi: 10.17226/25039.
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Suggested Citation:"CHAPTER FIVE Airport Experiences with Different FBO Models." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Operator Options for Delivery of FBO Services. Washington, DC: The National Academies Press. doi: 10.17226/25039.
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Suggested Citation:"CHAPTER FIVE Airport Experiences with Different FBO Models." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Operator Options for Delivery of FBO Services. Washington, DC: The National Academies Press. doi: 10.17226/25039.
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Suggested Citation:"CHAPTER FIVE Airport Experiences with Different FBO Models." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Operator Options for Delivery of FBO Services. Washington, DC: The National Academies Press. doi: 10.17226/25039.
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Suggested Citation:"CHAPTER FIVE Airport Experiences with Different FBO Models." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Operator Options for Delivery of FBO Services. Washington, DC: The National Academies Press. doi: 10.17226/25039.
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Suggested Citation:"CHAPTER FIVE Airport Experiences with Different FBO Models." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Operator Options for Delivery of FBO Services. Washington, DC: The National Academies Press. doi: 10.17226/25039.
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Suggested Citation:"CHAPTER FIVE Airport Experiences with Different FBO Models." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Operator Options for Delivery of FBO Services. Washington, DC: The National Academies Press. doi: 10.17226/25039.
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Suggested Citation:"CHAPTER FIVE Airport Experiences with Different FBO Models." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Operator Options for Delivery of FBO Services. Washington, DC: The National Academies Press. doi: 10.17226/25039.
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Suggested Citation:"CHAPTER FIVE Airport Experiences with Different FBO Models." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Operator Options for Delivery of FBO Services. Washington, DC: The National Academies Press. doi: 10.17226/25039.
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Suggested Citation:"CHAPTER FIVE Airport Experiences with Different FBO Models." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Operator Options for Delivery of FBO Services. Washington, DC: The National Academies Press. doi: 10.17226/25039.
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Suggested Citation:"CHAPTER FIVE Airport Experiences with Different FBO Models." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Operator Options for Delivery of FBO Services. Washington, DC: The National Academies Press. doi: 10.17226/25039.
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Suggested Citation:"CHAPTER FIVE Airport Experiences with Different FBO Models." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Operator Options for Delivery of FBO Services. Washington, DC: The National Academies Press. doi: 10.17226/25039.
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Suggested Citation:"CHAPTER FIVE Airport Experiences with Different FBO Models." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Operator Options for Delivery of FBO Services. Washington, DC: The National Academies Press. doi: 10.17226/25039.
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Suggested Citation:"CHAPTER FIVE Airport Experiences with Different FBO Models." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Operator Options for Delivery of FBO Services. Washington, DC: The National Academies Press. doi: 10.17226/25039.
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Suggested Citation:"CHAPTER FIVE Airport Experiences with Different FBO Models." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Operator Options for Delivery of FBO Services. Washington, DC: The National Academies Press. doi: 10.17226/25039.
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Suggested Citation:"CHAPTER FIVE Airport Experiences with Different FBO Models." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Operator Options for Delivery of FBO Services. Washington, DC: The National Academies Press. doi: 10.17226/25039.
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Suggested Citation:"CHAPTER FIVE Airport Experiences with Different FBO Models." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Operator Options for Delivery of FBO Services. Washington, DC: The National Academies Press. doi: 10.17226/25039.
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Suggested Citation:"CHAPTER FIVE Airport Experiences with Different FBO Models." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Operator Options for Delivery of FBO Services. Washington, DC: The National Academies Press. doi: 10.17226/25039.
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Suggested Citation:"CHAPTER FIVE Airport Experiences with Different FBO Models." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Operator Options for Delivery of FBO Services. Washington, DC: The National Academies Press. doi: 10.17226/25039.
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Suggested Citation:"CHAPTER FIVE Airport Experiences with Different FBO Models." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Operator Options for Delivery of FBO Services. Washington, DC: The National Academies Press. doi: 10.17226/25039.
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Suggested Citation:"CHAPTER FIVE Airport Experiences with Different FBO Models." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Operator Options for Delivery of FBO Services. Washington, DC: The National Academies Press. doi: 10.17226/25039.
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Suggested Citation:"CHAPTER FIVE Airport Experiences with Different FBO Models." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Operator Options for Delivery of FBO Services. Washington, DC: The National Academies Press. doi: 10.17226/25039.
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Suggested Citation:"CHAPTER FIVE Airport Experiences with Different FBO Models." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Operator Options for Delivery of FBO Services. Washington, DC: The National Academies Press. doi: 10.17226/25039.
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44 CHAPTER FIVE AIRPORT EXPERIENCES WITH DIFFERENT FBO MODELS INTRODUCTION TO THE CASE STUDIES This chapter summarizes the original research conducted for this synthesis. Table 12 lists the 10 public airports and repre- sentatives from three FBO networks that participated in the synthesis, plus the codes by which the airports will be referred to in this chapter. TABLE 12 AIRPORTS AND FBOs PARTICIPATING IN THE CASE STUDIES Airport Code Airport Sponsor 2016 GA Operations FBOs on Airport Appleton International Airport ATW Outagamie County (WI) 22,331 1 Fort Wayne International Airport FWA Ft Wayne/Allen County Airport Authority (IN) 14,296 1 Southern Illinois Airport MDH Southern Illinois Airport Authority (IL) 60,093 1 Capital Region International Airport LAN Capital Region Airport Authority (MI) 15,821 1 Coleman A. Young Municipal Airport DET City of Detroit (MI) 39,781 1 MBS International Airport MBS City of Midland, County of Bay, City of Saginaw (MI) 11,486 1 Boeing Field/King County Int'l Airport BFI King County (WA) 127,545 3 Tampa International Airport TPA Hillsborough County Aviation Authority (FL) 22,599 2 Van Nuys Airport VNY Los Angeles World Airports (CA) 195,992 4 Washington Dulles International Airport IAD Metropolitan Washington Airports Authority (VA) 36,256 2 FBOs Case Study Airports U.S. Locations Avflight LAN, MBS, DET 15 D.C. Metro Aviation Services GAI (Montgomery County Airpark) 1 Signature Flight Support/Signature Select BFI, TPA, VNY, IAD 130 Source: Airport/FBO Data provided by AC-U-KWIK®, a property of Penton Media and Air Traffic Activity Data System (ATADS). The airports represent a diverse number of GA operations and business models for the delivery of FBO services: • Airport-owned FBO facilities operated by a contract manager—ATW • Airport-owned and -operated FBOs—FWA and MDH • Private enterprise FBOs with traditional leases including airport FBO facilities—LAN, DET, and MBS • Larger FBOs that invest in facilities and improvements at airports—BFI, TPA, VNY, and IAD Four airport case studies have multiple FBOs, in-depth experience with FBO consolidation, and large FBO service net- works (BFI, TPA, VNY, and IAD). Two of the airports self-operate their FBOs (FWA and MDH). For the Michigan airports, close working relationships between the FBO and airport sponsor were responsible for airport turnarounds during difficult and financially challenging times. In different ways, each case study underscores the important role cooperative working relationships play in operating an effective airport business enterprise. The three FBOs featured in the case studies are Avflight, D.C. Metro Aviation Services, and Signature Flight Support. Avflight is a network FBO that typically serves as the sole operator at small and medium-size airports. D.C. Metro Aviation Services is an independent, family-owned FBO, that operates at one location. Signature Flight Support is the largest FBO network in the United States; it specializes in business aviation.

45 INTERVIEW QUESTIONS To prepare for each case study, the research team reviewed background information about each airport and FBO and custom- ized a set of interview questions according to the following interview guidelines. Airport Profile 1. Airport runway lengths. Does the length of the airport’s runway(s) restrict the types of aircraft that can operate at the airport? Are there instrument approaches? 2. For air traffic control airports, please provide tower counts for GA and business aircraft operations; for other airports, please provide estimates of operations. Have any significant changes occurred in the past 10 years? If so, what factors contributed to the change? Current FBO Situation 1. How many FBOs operate on the airport today? Please give a brief history of how your airport has delivered FBO ser- vices in the past. 2. What services does the FBO provide? 3. Does the FBO own hangars? (How many/what type?) 4. Does the FBO manage airport-owned hangars? (What is the percentage shares of rent?) 5. Is the FBO(s) profitable? Is one looking to consolidate FBO operations by purchasing the leasehold of the other? (Or has this already happened?) 6. [In instances when the airport took over from an insolvent FBO], did the airport receive the FBO operation with or without court supervision? 7. Did the airport sponsor choose not to renew a lease or terminate because of substandard performance? 8. What is the status of your FBO lease(s)? a. In what year was the initial FBO lease(s) executed? Is this first lease with this FBO or were there previous leases? b. Was the FBO secured by competitive bid or a negotiation process? c. Who prepared lease? Were parties represented by attorneys? d. What was the initial term of the lease? Does the lease have renewal options? If so, what is the maximum term includ- ing renewal options? e. How was initial rent determined? Was rent adjusted during the lease term? f. What are the current FBO’s investment and maintenance requirements, both ongoing and at renewal? g. Were any assignments of this lease made to other FBOs? What were the reasons for assignment? What were the terms of assignment? h. Were any subleases involved? What were the reasons for the sublease? What were the terms of the sublease? i. Have any issues or problems with the lease been reported? j. What do you envision will happen when the lease ends? (Negotiate a new lease with the same FBO? Put out an RFP? Airport takes over operation of FBO? Something else?)

46 Airport Sponsor Perspective 1. If making a new RFP, what would be the airport’s preferred business model for the FBO? (private, airport operated, airport owned/private operator) 2. Does the airport have minimum standards (MS) for FBOs? When were they written or adopted? Do they reflect the current state of FBO operations in the most recent economy? Has the airport considered updating the MS? 3. Are FBO lease terms as well as rates and charges up to date? 4. Does the airport own the equipment and fixtures necessary to operate an FBO? (buildings, tugs, tow bars, fuel trucks) 5. What does the airport sponsor provide on a regular basis to the FBO for maintenance, capital investment, and utilities? 6. What does the airport see as the key concerns when it comes to choosing a new FBO provider? 7. Has the airport recently conducted an analysis of FBO services and examined various approaches to providing these services? 8. What are an FBO’s key items of interest when evaluating your airport? (operations, fuel sales, land lease, building lease) 9. What does the airport see as key issues in having a new private FBO provider take over an existing FBO lease? Taking over an airport-operated FBO? 10. How much do land leases contribute to airport revenues? Would the airport prefer to be the leasing agent or to contract that function out to others? 11. Is it important to keep the airport employee roster to a minimum, or would the airport rather have greater control over staffing operations at the airport? 12. Does the airport have a co-marketing plan with the FBO? Has this joint marketing attracted new business? The interview results provided an interesting perspective on the various ways that airport sponsors provide FBO services. The case studies are presented in the following sections. APPLETON INTERNATIONAL AIRPORT, APPLETON, WISCONSIN Based on research and an interview with Abe Weber, airport manager Airport Overview Appleton International Airport (ATW), located 3 mi west of Apple- ton, Wisconsin, is owned by Outagamie County. ATW is a pri- mary, nonhub commercial service airport with two runways (8,002 ft x 150 ft and 6,501 ft x 150 ft) and six instrument approaches. In calendar year (CY) 2015, the airport enplaned 258,321 passengers on Delta Air Lines, Delta Connection, United Express, and Alle- giant Air. ATW has 71 based aircraft: 50 are single-engine, four are jets, and 17 are multi-engine (FAA Form 5010 Report, December 2014). Table 13 shows 2015 airport operations. Appleton International Airport • Contract manager agreement • Airport-owned terminal and hangars • Terminal–Class D Net Zero Emission Building

47 TABLE 13 OPERATIONS AT APPLETON INTERNATIONAL AIRPORT, 2015 Type of Operation Operations Air Carrier 4,433 Air Taxi 7,767 General Aviation Local 6,134 General Aviation Itinerant 15,070 Military 126 Total Operations 33,530 Source: ATADS. Key Findings ATW is an excellent example of an airport-owned FBO that uses a contract manager and several specialized subtenants to provide flight training, aircraft maintenance, and charter services. ATW also offers U.S. Customs and Border Protection ser- vices as a user fee port. ATW is near Wittman Regional Airport in Oshkosh, Wisconsin, which is famous for its annual EAA AirVenture Fly-In Convention that attracts GA aircraft of all types to Oshkosh. As a result, ATW’s monthly activity nearly doubles each July. Because the airport is a destination for many pilots, the airport sponsor takes seriously its opportunity to set an example as a customer- and community-oriented airport. In 2011, ATW was one of 10 airports the FAA selected to participate in the sustainable master plan pilot program. As part of this program, the airport established a GA campus that included a new energy efficient FBO terminal, corporate hangar, and storage hangar. Figure 10 shows the exterior of the Appleton FBO terminal. Figure 11 shows the interior. The FBO terminal was completed in August 2013 and includes the following energy efficient components: • Geothermal heating and cooling • In-floor radiant conditioning • Photovoltaic solar energy roof panels • High-performance glazing • Thermal mass with enhanced envelope insulation • Occupancy sensors for lighting and mechanical systems • Natural ventilation • Rainwater capture cistern for water reuse • High-efficiency electrical mechanical and plumbing systems (ATW n.d.) According to ATW’s website, “the GA terminal building has a target of 80% total energy savings, including the offset provided by on-site renewable energy systems. The remainder of the building’s energy needs are purchased from off-site renewable sources, making the south GA terminal a Class D NZEB–Net Zero Emissions Building. A Class D NZEB produces or purchases enough emissions-free renewable energy to offset the emissions from all energy used in the building annually” (ATW n.d.). FIGURE 10 Appleton FBO terminal. Source: Appleton International Airport.

48 FIGURE 11 Interior of Appleton FBO terminal. Source: Appleton International Airport. FBO History The evolution of FBO services to an airport-owned business model is both interesting and instructive. Appleton International had a long-term lease with locally owned Max-Air FBO that expired. The FBO remained operating on a month-to-month lease in facilities owned by the airport. At the time, the FBO operation was occupying space that the airport wanted to use for commercial airline operations, so the airport decided to move the GA FBO facility to the airport’s south side. To initiate the move, in 2007 the airport issued an RFP for a green-field development on the south side. However, it did not receive any acceptable proposals and the Great Recession of 2008 ensued. The airport hired a consultant and began to consider different FBO delivery models. Two key considerations were para- mount. One was the desire to ensure that FBO services embodied a strong emphasis on excellent customer service. The other was that because the airport was going to provide capital for investment in FBO facilities, it should also receive most of the revenue from FBO operations. The airport explored three management models: (1) having the county staff the FBO, (2) forming an LLC and running it as a standalone enterprise, and (3) following a contract management model that uses airport-owned equipment and facilities. The airport chose to invest in and develop the south side GA facility and to retain ownership of the FBO while contracting with a management company to run daily operations. The new FBO was named Platinum Flight Center. In 2010, the airport bought out the assets (the ground service equipment [GSE], computer systems, etc.) of Max-Air and hired a management company to run the FBO. The management company, Express Airport Services, retained many of Max-Air’s employees and operated from the existing airport-owned buildings. The airport broke ground on a new FBO facility in 2012 and began FBO operations from the new Net-Zero terminal building in 2013. The airport and FBO operation both benefit from the annual EAA AirVenture gathering. Since the new FBO facility opened, traffic for the event has steadily increased. In 2013, 418 aircraft operated on the FBO ramp; 458 in 2014; 525 in 2015; and 585 in 2016. During the event, the airport and FBO bring in additional volunteers to staff the gift shop and provide a quality customer service experience. The rental car companies add staff and cars for the event, and public transportation to Oshkosh is provided. Driving Traffic to the Airport The airport and the FBO management company have a co-marketing plan; they meet monthly to coordinate marketing and advertising. Each has a marketing and advertising budget that it uses to reach out to customers, but by coordinating efforts the airport and FBO increase their customer base and attract more transient customers during big events. In 2016, the Appleton area had a robust economy and was home to several global companies. The airport and surrounding community have a history of support and investment in the airport. Although historically the airport has had only one FBO, that one FBO has received enough business to be financially supported by current activity levels. Airline-based revenue rep-

49 resented approximately half the airport’s 2016 revenue (terminal rent, concessions, rental cars, landing fees, etc.). Land rent, building rent, and FBO operations contribute the other 50%. Airport Tenants Gulfstream Corporation has a service and modifications center located at ATW, as well as the final manufacturing phase of the G450 and G550 business jets. Appleton is also host to Air Wisconsin Airlines Corporation headquarters, a FedEx freight facility, Fox Valley Technical College’s Public Safety Training Facility, NewView Technologies aircraft window repair com- pany, and several additional T-hangar tenants. FBO Services and Subtenants The Platinum Flight Center FBO offers aircraft maintenance, charter service, and flight training through agreements with specialized aviation service providers located on the airport: NewView Technologies provides aircraft service, Max-Air pro- vides charter service, and CAVU Flight Academy provides flight training. FORT WAYNE INTERNATIONAL AIRPORT, FORT WAYNE, INDIANA Based on research and an interview with Scott Hinderman, executive director of airports Airport Overview Fort Wayne International Airport (FWA), located 8 mi south- west of Fort Wayne, Indiana, is owned by the Fort Wayne-Allen County Airport Authority. FWA is a primary nonhub commer- cial service airport with three runways (5/23 is 11,981 ft, 14/23 is 8,002 ft, and 9/27 is 4,001 ft) and 15 instrument approaches. In CY 2015, the airport enplaned 353,876 passengers on Delta Air Lines, U.S. Airways, Allegiant Airlines, American Eagle, and United Express. FWA has 53 based aircraft: 13 are jets, 26 are single-engine, 12 are multi-engine, and two are helicopters (FAA December 2014). Table 14 shows the airport’s 2015 operations. TABLE 14 OPERATIONS AT FORT WAYNE INTERNATIONAL AIRPORT, 2015 Type of Operation Operations Air Carrier 3,643 Air Taxi 15,246 General Aviation Local 3,530 General Aviation Itinerant 11,373 Military 405 Total Operations 34,197 Source: ATADS. FWA stands out in the case studies because it has transitioned its FBO from a private enterprise model to the exclusive proprietary option available under the grant assurances. The Fort Wayne Airport Authority decided to operate the Fort Wayne Aero Center FBO as a proprietary exclusive because the airport had enough business to support one FBO, but the inclusion of additional FBOs could create financial stress and jeopardize their operations. Additionally, the previous FBO facility was obstructing a planned terminal expansion. Atlantic Aviation did submit a proposal to build its own facility in a new location, but the authority decided to “test the waters in a different direction” and built a $4 million, 12,000-ft2, state-of-the-art FBO facility. The FBO had not been chosen by the time construction began in 2014. FBO History Around 1975, a locally owned FBO company signed a 40-year lease with FWA. Over the course of the lease, the FBO was sold to nonlocal corporate operators including Mercury Air and, most recently, Atlantic Aviation. At the end of the lease in Fort Wayne International Airport • Proprietary exclusive business model • Airport-developed FBO center at FWA • Authority has operated FBO at Smith Field since 2008

50 January 2016, the Fort Wayne Airport Authority received the land, buildings, and a 150,000-gal fuel farm under the reversion clause of the contract. In addition, the authority owns a separate GSE fuel farm with credit card readers. The airport took over the fuel farm’s maintenance while it considered options for future FBO delivery. FIGURE 12 Fort Wayne FBO terminal. Source: Fort Wayne International Airport. Transition Phase The authority began to consider different FBO models 2 to 3 years before the 40-year lease expired. It began the process of issuing an RFI, request for quotation (RFQ), and RFP for the FBO. It also considered FBO management models and running the FBO in a nonexclusive model. The group chose the proprietary exclusive option available under the grant assurances (FAA 2009): Grant Assurance 23: Exclusive Rights “It will permit no exclusive right for the use of the airport by any person providing, or intending to provide, aeronautical services to the public. For purposes of this paragraph, the providing of the services at an airport by a single FBO shall not be construed as an exclusive right if both of the following apply: • It would be unreasonably costly, burdensome, or impractical for more than one fixed-based operator to provide such services, and • If allowing more than one fixed-based operator to provide such services would require the reduction of space leased pursu- ant to an existing agreement between such single fixed-based operator and such airport. It further agrees that it will not, either directly or indirectly, grant or permit any person, firm, or corporation, the exclusive right at the airport to conduct any aeronautical activities, including but not limited to charter flights, pilot training, aircraft rental and sightseeing, aerial photography, crop dusting, aerial advertising and surveying, air carrier operations, aircraft sales and services, sale of avia- tion petroleum products whether or not conducted in conjunction with other aeronautical activity, repair and maintenance of aircraft, sale of aircraft parts, and any other activities which because of their direct relationship to the operation of air- craft can be regarded as an aeronautical activity, and that it will terminate any exclusive right to conduct an aeronautical activity now existing at such an airport before the grant of any assistance under Title 49, United States Code” (FAA 2009). “Grant Assurance 23 provides for two limited exceptions. An airport sponsor may choose to offer some or all aeronautical services itself and exclude other entities from competing with these services. This is referred to as the airport sponsor’s pro- prietary exclusive right. If an airport sponsor chooses to exercise its proprietary exclusive right to offer aeronautical services, it must do so with its own resources and its own employees; airport sponsors may not contract out their proprietary exclusive right” (FAA n.d.). FIGURE 13 Interior of the Fort Wayne FBO terminal. Source: Fort Wayne International Airport.

51 Formation of Fort Wayne Aero The authority subsequently formed Fort Wayne Aero Center as the airport’s FBO provider and hired an FBO manager. The FBO pays rent to the authority for facilities use and bought approximately 60% of its GSE new and 40% used and refurbished. It also hired an experienced GSE mechanic to keep all equipment running reliably. The FBO’s objective is to have the right equipment ready and able at all times, so it supports and maintains its equipment accordingly. Fort Wayne Aero Center provides into-plane fueling for FWA airline customers. It contracts out GA aircraft maintenance service (Premiere Avionics & Maintenance), and airport terminal concessionaires provide FBO catering. FWA does not pro- vide flight instruction; that is provided at nearby Smith Field, which is also operated by the Fort Wayne Airport Authority. A Part 135 charter operator from a nearby airport flies to FWA to pick up charter customers and buys fuel from the Fort Wayne Aero Center. As a new FBO, FWA is looking for additional opportunities to provide service to the airport’s customers (e.g., de-icing service, ground handling, Part 135 service). FWA has a tradition of customer service that includes greeting commercial flight passengers with warm cookies. Its goal is to extend that level of service to the GA customer. The FBO has hired employees who desire to help others and to reflect a high level of customer service. All the FBO management is local and has the same Hoosier-hospitality attitude the authority strives to provide. Smith Field The Fort Wayne-Allen County Airport Authority also operates nearby Smith Field, and has been operating the FBO there since 2008. The business models at the two airports are very different yet complementary. Smith Field is a small GA airport that offers flight instruction and a place for local pilots to enjoy without the presence of a commercial service operation. Lessons Learned Fort Wayne Aero Center is a work in progress. “An airport getting into the FBO business should bring on their FBO manager as soon as possible after the decision is made,” said Hinderman, and “the operation will also need FBO management software, GSE, insurance, phone systems, IT systems, and agreements with any airlines to whom they will provide into-plane fueling or de-icing.” Any airport considering self-operating the FBO may want to begin considering management options at least 2 to 3 years before existing leases expire. If less time is available before lease-end, it should consider a short-term FBO management con- tract while the airport sponsor works out a future delivery method. “Negotiating a new lease with an existing provider without an RFI, RFQ, and RFP process could be perceived as a closed process,” said Hinderman, “so opening the FBO opportunity up to the public process may yield a better business model and is a transparent way of offering airport land and/or improvements to businesses.” SOUTHERN ILLINOIS AIRPORT, CARBONDALE, ILLINOIS Based on research and an interview with Gary Shafer, airport/FBO manager Airport Overview Southern Illinois Airport (MDH), located 3 mi northwest of Carbondale, Illinois, is owned by the Southern Illinois Airport Authority. MDH is a GA airport with three runways (18L/36R is 6,506 ft, 18R/36L is 3,498 ft, and 06/24 is 4,163 ft) and four instrument approaches. In CY 2015, the airport enplaned 281 passengers on large aircraft charter services. MDH has 77 based aircraft: two are jets, 67 are single-engine, six are multi- engine, and two are helicopters (2016 5010 Report). The airport’s largest tenant is Southern Illinois University (SIU), which offers one of the highest-ranked collegiate flight programs in the nation as well as bachelor’s and master’s degree programs in aviation. Southern Illinois Airport • Airport-operated FBO • Two previous failed FBOs • Home base for SIU Flight School

52 Table 15 shows 2015 operations at the airport. The flight school contributes to the large number of local GA operations. TABLE 15 OPERATIONS AT SOUTHERN ILLINOIS AIRPORT, 2015 Type of Operation Operations Air Carrier 8 Air Taxi 26,156 General Aviation Local 57,002 General Aviation Itinerant 4,046 Military 14 Total Operations 84,226 Source: ATADS. At MDH, the authority owns the FBO buildings, fuel farms, and fuel trucks. This case study highlights multiple FBO turnovers from private operators back to the Airport Authority. Twice since 1980, a private FBO has failed. Both times, the authority resumed control of FBO operations. FBO History Beginning in about 1960, SIU operated the sole FBO in support of its aviation program and the local aviation community. The SIU FBO owned a 40,000-gal underground fuel farm and leased airport-owned hangars, maintenance space, and office space located in a prime area of the airport. By 1980, Woodruff Aviation and other service providers had entered the airport market with flight schools, Avgas fuel service, and aircraft sales. In cooperation with the airport, Woodruff Aviation installed a 10,000-gal fuel farm. Woodruff pro- vided fuel sales, flight instruction, Part 135 charter, and rental aircraft from leased office space. Woodruff did not have hangar or maintenance space, and it competed with SIU operation on fuel sales. However, Woodruff’s location on the airport was less convenient than SIU’s location, and pilots’ habit of taxiing to a certain place was hard to change. In 1983, Woodruff Aviation left the airport and SIU provided the only option for fuel or services. FIGURE 14 Southern Illinois Airport. Source: Southern Illinois Airport. In 1987, the authority negotiated with Lyon Aviation (then a current tenant) to build a new 10,000-ft2 hangar. Once built, Lyon Aviation began to offer FBO services from the hangar. Lyon Aviation also assumed the previously installed 10,000-gal Avgas fuel tank. Lyon Aviation operated from a remote location on the airport with a Part 61 flight school, a Part 135 charter operation, and a maintenance service. Lyon Aviation competed with the SIU operation.

53 In 1990, the FBO was sold to P & R Air. In 1993, the authority renegotiated the SIU lease and exchanged the remote FBO space for the more favorable facilities SIU had occupied with its FBO operation. SIU stopped operating its FBO, except it continued to use its own fuel truck and line maintenance but purchased fuel at the airport’s fuel farm. The airport installed a new 20,000-gal underground fuel farm for both Jet-A and Avgas. The operational life of SIU’s fuel farm was ending, so SIU removed it and remediated the site. SIU began to purchase bulk fuel from the airport FBO’s fuel farm. P & R Air relocated to the prime space previously occupied by the SIU FBO operation. Later in 1993 (6 months after moving), the P & R Air FBO opted to leave the business. The authority decided to enter the business rather than search for another private enterprise FBO. The authority established an enterprise fund to operate the FBO and bought the GSE from P & R Air. From 1993 to 2002, the authority operated the FBO. During that time, the authority repaired and updated the FBO facil- ity and invested in fuel trucks, GSE, and airplanes. The FBO expanded its services to include a Part 61 flight school, aircraft rental, and aircraft maintenance. FIGURE 15 Flightline FBO. Source: Southern Illinois Airport. In 2001, MDH released an RFP for the FBO operation, and in 2002, Hale Aviation was selected from two respondents. Hale Aviation ran the FBO from June 2002 until June 2007. In 2007, Hale Aviation sold the lease to Tate Aviation, which ran the FBO until the lease expired in 2011. In 2011, MDH established another enterprise fund FBO named Flightline and bought the business assets of Tate Aviation. In addition to offering such traditional FBO services as fuel and ground services, the Airport Authority also engages in flight training and rental services, aircraft and engine maintenance, and avionics installs and repairs. The authority brokers charter services rather than owning and operating this service. However, it does own two of the four aircraft used in the flight training operation, which currently has six certified flight instructors and 31 students. FBO staff and airport staff are separate with two exceptions: the airport manager and FBO manager are the same, as is the financial person. The FBO (and all other businesses on the airport) can hire SIU aviation students, and open jobs are never left unfilled. Students can receive school credit for working in the FBO operation at the airport. Operating the FBO as an enterprise fund allows the authority to conduct the FBO business on the private enterprise model, pay rent and flowage fees to itself, and provide a possible successor with the information necessary to take over the business. However, the authority is always on the lookout for the right party to contract with for the FBO. Because the authority owns all the FBO equipment and facilities, it would most likely seek a contract management arrangement. And because margins could be low for an FBO contractor at MDH, the authority would probably consider a model that shared revenue with a mini- mum guarantee to the operator while retaining some pricing oversight by the authority.

54 Challenges and Opportunities The airport is located in a rural area of the country with limited regional industrial development. The impacts of reduced GA piston flying and a relatively small jet market potentially limit fuel growth. Contract fuel loyalty programs and jet aircraft tankering ability can also limit the potential for large jet fuel sales. FIGURE 16 Flightline FBO. Source: Southern Illinois Airport. Additionally, FBOs that offer full- and self-service fueling have difficulty competing on price with a self-serve fuel tank located at a very rural airport with no other services. Self-service facilities that offer lower-priced fuel often capture recre- ational pilots, who are price sensitive. CAPITAL REGION INTERNATIONAL AIRPORT, LANSING, MICHIGAN Based on research and interviews with Jonathon Vrabel, Capital Region International Airport, and Carl Muhs, Avflight CEO Overview Lansing is the capital of Michigan and the home of Michigan State University. The presence of government and educational activity are both important drivers of the local economy. Airport Overview Capital Region International Airport (LAN), located 3 mi north- west of downtown Lansing, is owned and operated by the Capi- tal Region Airport Authority. LAN is a primary nonhub commercial service airport with three runways (06/24 is 5,002 ft, 10L/28R is 3,601 ft, and 10R28/L is 8,506 ft) and seven instrument approaches. LAN has 65 based aircraft: five are jets, 41 are single-engine, 17 are multi-engine, and two are helicopters (5010 Report, December 2015). The history of aviation activity is reflective of national trends following the Great Recession in 2007 and 2008, and intensi- fied by the collapse of the automotive industry during this same period. Table 16 compares 2005 and 2015 operations at the airport, showing a steep decline of activity in all sectors of aviation. TABLE 16 OPERATIONS AT CAPITAL REGION INTERNATIONAL AIRPORT, 2005 AND 2015 Type of Operation 2005 Operations 2015 Operations Air Carrier 11,820 2,978 Air Taxi 15,460 12,358 General Aviation Local 28,524 4,835 General Aviation Itinerant 23,953 12,407 Military 2,850 45 Total Operations 82,607 32,623 Source: ATADS. Capital Region Int’l Airport • Traditional FBO lease • Single FBO at LAN • Commercial airport in Michigan’s capital city, home of Michigan State University and GM factories

55 FIGURE 17 Capital Region International Airport airfield. Source: Capital Region International Airport. Airport passenger activity also suffered. Enplanements peaked in 2000 at 332,669 and bottomed in 2010 at 136,548. Cur- rently, the airport offers service by American Airlines, Delta Air Lines, and United Airlines to Detroit (DTW), Chicago O’Hare, Minneapolis, and Washington, D.C. Apple Vacations offers seasonal service to Cancun, Punta Cana, and Puerto Vallarta. Enplanements in 2015 were 180,927. LAN is an interesting case study from multiple perspectives. The city has endured sustained economic declines in the past decade; consequently, market values for land at the airport also have plummeted. The history of FBOs on the airport reflects the contraction of airport activity. However, subsequent consolidation of properties and services has delivered a good outcome for the airport and a reinvigorated level of service for airport customers. FBO History Superior Aviation Inc. served as the FBO during a long-term lease that began in October 1988 and was set to terminate in September 2038. However, in September 2003, Superior asked to terminate its fueling operations agreement. The Airport Authority canceled Superior’s contract and, without an RFP, negotiated a new contract with AeroGenesis to take over the fueling operation in October 2003. AeroGenesis called their Lansing operation the Lansing Jet Center. AeroGenesis lasted as FBO for 3 years, until Avflight Lansing obtained the fueling rights in 2006. Avflight also acquired property from AeroGenesis and from Superior Aviation (including the fuel farm) to create the current FBO operation, which offers diversified services to the GA fleet and provides ground support to American Airlines and Apple Vacations. The resources needed to create the FBO were collected with the cooperation of the airport and of the businesses that were com- bined or acquired to create a financially viable FBO provider. FIGURE 18 Capital Region International Airport landside aerial view. Source: Capital Region International Airport.

56 Current Airlines, Tenants, and Activity Delta Air Lines, United Airlines, American Airlines, and Apple Vacations serve LAN. For international flights, the airport offers U.S. Customs and Border Patrol. Corporate aviation tenants included companies based near Lansing (Jackson National Life Insurance and Dart Container), which owned hangars on leased land. These tenants purchased fuel and services from the Avflight Lansing FBO. Several times per year college football and basketball teams playing at Michigan State University, Central Michigan University, and Western Michigan University flew into the airport on chartered flights. Recreational and light GA is also active on the field, but at a diminished level from previous years. Lessons Learned The Airport Authority has addressed declining activity at the airport in constructive ways. For example, leases do not include reversion clauses because the authority does not want to inherit old buildings that occupied leased land. Leases stipulate that all improvements be removed and the land returned to original condition. The options for a lessee at the end of a lease are to negotiate a new lease to occupy the same parcel or to remove the improvements and return the vacant land to the airport. Currently, there is no market for improved land at the airport. COLEMAN A. YOUNG AIRPORT, DETROIT, MICHIGAN Based on research and interviews with Jason Watt, airport manager, and Carl Muhs, Avflight, CEO, and review of the report from the State Historic Preservation Office Airport History Coleman A. Young Airport (DET) is the original downtown Detroit City Airport. DET has a storied past. The airport, located 5 mi northeast of Detroit in a heavily populated area, is owned by the city. It began as a landing strip in 1927 and grew to serve as one of the busiest commercial airports in the country until 1946 when, because of a lack of space, com- mercial operations were transferred to Willow Run Airport as an interim solution and then later to Detroit Metropolitan Wayne County Airport. In 1963, the city approved a $4 million expansion of the airport that included a new terminal, runway work, runway safety measures, and elimination of certain hazards. The new two-story glass-and-concrete terminal was dedicated in 1966. In 1969, an air traffic control tower was completed. At that time, operations peaked at 235,000 and over 300 aircraft were based at DET. In 1987, Mayor Coleman A. Young wanted to turn the airport into a gateway to the city. In preparation for the return of commer- cial service, the airport underwent a $25 million renovation, primarily runway and taxiway improvements and a terminal remodel. From 1988 to 2000, the airport supported commercial service including flights by Southwest Airlines, Chautauqua Airlines as a U.S. Air Express, Midway Connection, and Pro Air; however, since 2000, DET has served primarily as a corporate and GA airport. FIGURE 19 Aerial view of Coleman A. Young Airport. Source: Great Lakes Aerial Photos. Coleman A. Young Airport • Traditional FBO lease with added functions • Single FBO at DET • FBO pitched in during Detroit bankruptcy

57 DET Today DET has two runways (07/25 is 3,714 ft and 15/33 is 5,090 ft) and six instrument approaches. In 2015, 61 aircraft were based at DET: six are jets, 49 are single-engine, and six are multi-engine (FAA 2014). Table 17 shows a history of airport operations from 2000 to 2015; the remarkable decline in activity was exacerbated by Detroit’s longstanding financial difficulties that culminated in municipal bankruptcy in 2013. TABLE 17 OPERATIONS AT COLEMAN A. YOUNG AIRPORT, 2000, 2005, AND 2015 Type of Operation 2000 Operations 2005 Operations 2015 Operations Air Carrier 4,336 125 2 Air Taxi 10,169 4,661 1,753 General Aviation Local 41,418 30,924 25,254 General Aviation Itinerant 96,998 37,769 17,212 Military 911 1,395 60 Total Operations 153,832 74,874 44,281 Source: ATADS. FBO History As the City of Detroit faced extreme financial hardships, the airport remained an important link for business access to the city. During the Great Recession, the airport lost its FBO, leaving DET with no services. An interim service provider was retained while the city issued an RFP. Avflight bid for and won the FBO contract, negotiating a 3-year contract in 2011 with two 1-year extensions. It operates as Avflight Detroit City FBO. Because of previous investments in the airfield, terminals, and hangars, the city had many facilities on airport property, albeit in disrepair. Maintaining these assets and funding repairs was a challenge—the city’s lack of available cash and credit made direct municipal management of the airport almost impossible. Avflight invested in the main terminal building. It converted some of the space into an FBO terminal and created office space for airport staff, a rental car company, and an airport consultant. In addition, DET manages 14 rentable hangars, two of which are leased to museums: the Tuskegee Airman Museum and the World Heritage Museum. The FBO rents two hangars and the others are leased to corporate clients from surrounding communities that base their aircraft at the airport. As of 2016, the airport also had 70% occupancy of its 122 rented T-hangars. Although light GA business is small, the number of aircraft stored in T-hangars remains stable. Avflight eventually took over responsibility for snow removal, lawn maintenance, and some building maintenance. The FBO has a fixed price agreement to maintain buildings, plow snow, and mow grass. Furthermore, Avflight has the credit needed to get service providers to do good work for reasonable prices. In its lease arrangement, the FBO pays the airport rents, but if it spends money on fixing airport property, it deducts that amount from the rent owed. By autumn 2016, the airport sponsor-FBO partnership focused on creating more rentable assets and airfield improvements. The airport and FBO worked together to identify tasks that were then assigned to the entity capable of completing them. The airport focused five employees on airport infrastructure (e.g., runways, taxiways) while the FBO provided support and con- tinued to complete tasks associated with buildings, grounds maintenance, and customer service. Satisfaction with FBO performance resulted in a 3-year extension of Avflight’s contract. Conclusions Coleman A. Young Airport is an excellent example of what can be achieved when the airport’s culture supports its mission. A close working relationship between the FBO and the airport can help to sustain both entities, and dividing airport tasks and assigning them in nontraditional ways may benefit both. This approach helped to support the airport during Detroit’s financial crisis.

58 Lessons Learned The culture of an airport starts at the top. Airport leadership can turn a difficult situation into a comeback story by setting the pace and stepping up to the tasks. At DET, the airport manager, Jason Watt, was faced with declining revenue and a disap- pearing budget. Most of the airport’s employees had moved on, so very little staff was available to maintain the airport. Watt took on whatever needed to be done. If the trash needed to be picked up and taken to the dump, he did it. If the grass needed to be mowed, he did it. Snow plowed, plumbing fixed, everything—Watt took care of it. Soon the other people on the airport took notice. Airport tenants, the FBO provider, and everyone else began to chip in and help Watt take care of the airport. As a result, the airport received a 99% positive customer service rating. Watt sees one role of the airport as being a conduit to drive commerce to the community. As of late 2016, the desire to live and play in trendy downtown areas has inspired some redevelopment in the city. The airport has seen an increase in real estate investors traveling through the FBO to invest in the city’s sports facilities and housing opportunities. The airport and FBO worked together to present a well-groomed front entrance that leads to real estate investment opportunities in the City of Detroit. The airport is located 10–15 min from several downtown sporting venues (Ford Field, Comerica Park, Joe Lewis Hockey Arena), and like other airports near these venues, DET experienced an influx of traffic during hometown games and an addi- tional boost when local teams made their respective playoffs. MBS INTERNATIONAL AIRPORT, FREELAND, MICHIGAN Based on research and interviews with Jeff Nagel, airport manager, and Carl Muhs, Avflight CEO Airport Overview MBS International Airport (MBS), located in Freeland, Michigan, is owned by the City of Midland, County of Bay, and City of Saginaw, and is operated by an airport commission. MBS is a primary nonhub com- mercial airport with two runways (05/23 is 8,002 ft and 14/32 is 6,399 ft) and 10 instrument approaches. MBS has 27 based aircraft: 13 are jets, eight are single-engine, five are multi-engine, and one is a helicopter (5010 Report December 2015). The number of jets based at the airport is noteworthy. Table 18 shows operations at the airport for a 15-year period, 2005–2015. Following airline deregulation, MBS’s air service expanded as airlines jockeyed for market dominance. In the 1980s and 1990s, MBS was served by Air Canada, American Eagle, Chicago Express, Comair, Continental, Northwest, Midwest Express, and U.S. Airways. In CY 2005, MBS enplaned 213,669 passengers. In CY 2015, the airport enplaned 119,004 passengers on Delta Connection and United Express. Today both MBS and Bishop International Airport (FNT, which is located in Flint, 51 mi from MBS) compete for passengers. TABLE 18 OPERATIONS AT MBS INTERNATIONAL AIRPORT, 2005, 2010, AND 2015 Type of Operation 2005 Operations 2010 Operations 2015 Operations Air Carrier 10,757 927 879 Air Taxi 4,657 9,859 7,213 General Aviation Local 16,446 7,957 2,743 General Aviation Itinerant 18,398 9,006 8,744 Military 190 413 72 Total Operations 50,448 28,162 19,651 Source: ATADS. MBS International Airport • Traditional FBO Lease • Single FBO at MBS • Commercial service and preponderance of itinerant GA

59 This case study demonstrates the value of airport, FBO, and customer relationships and how an FBO can participate effec- tively in an airport’s air service development program. FBO History MBS has the distinction of using the same FBO provider for more than 20 years. In 1995, Avflight Saginaw took over the FBO location and operations from Aero Services and negotiated a lease with the Airport Commission without an RFP. Avflight Saginaw leased a hangar from the airport, erected another building, and installed a fuel farm on leased land to support its FBO operation. Avflight Saginaw switched airport hangars with another tenant in 2011, and then remodeled the new FBO terminal building and offices. A new 30-year lease was signed in 2011. During that time, the airport and FBO teamed to secure airline service with FBO-provided ground handling and into-plane fueling. During the negotiation process, the airline gave the airport and FBO a list of items it required for ground service. The FBO either already had or was able to obtain all the necessary equipment, which made the airport’s task list much shorter. FIGURE 20 MBS Airport FBO terminal. Source: Avflight Saginaw. Seven hangars are located on the airport. MBS owns one hangar that is leased to Avflight Saginaw. The FBO leases land for its own hangar and the fuel farm. The other five hangars are corporate-owned buildings on ground leases. In 2016, MBS International Airport was home to a few corporate operators, including one Fortune 500 company with four based aircraft. Thirteen of the 27 based aircraft are jets. None of the based customers is self-fueling. Lessons Learned “Building a strong relationship with the airport’s FBO and base customers is very important,” said Jeff Nagel. “The three-way relationship between airport and FBO, FBO and customers, and customers to airport is the key to having a strong business relationship that serves the airport community in the long run.” BOEING FIELD/KING COUNTY INTERNATIONAL AIRPORT, SEATTLE, WASHINGTON Based on research and interviews with Randall Berg, A.A.E., airport director, and Mark Witsoe, A.A.E., marketing and busi- ness manager Airport Overview Boeing Field/King County International Airport (BFI), located 5 mi south of downtown Seattle, Washington, is owned by King County. BFI is a primary nonhub commercial service airport with two run- ways (13R/31L is 10,000 ft and 13L/31R is 3,710 ft) and five instrument approaches. In CY 2015, the airport enplaned 18,945 passengers on small commercial airlines. BFI has 380 based aircraft: 86 are jets, 203 are sin- gle-engine, 60 are multi-engine, and 31 are helicopters (FAA Form 5010 Report, December 2015). Table 19 shows 2015 operations. Boeing Field/King County International Airport • Traditional FBO leases • Three FBOs on field • Recent FBO acquisitions activity • Large noncommercial airport • Boeing test field

60 TABLE 19 OPERATIONS AT BOEING FIELD/KING COUNTY INTERNATIONAL AIRPORT, 2015 Type of Operation Operations Air Carrier 10,896 Air Taxi 28,809 General Aviation Local 39,770 General Aviation Itinerant 84,280 Military 760 Total Operations 164,515 Source: ATADS. By most metrics, Boeing Field supports a large volume of GA and business aviation. The airport also serves a Boeing test field. The airport is an excellent example of multiple FBO operations at a single field. Clay Lacy is one of the oldest FBOs and has been on the field for more than 20 years. The other two FBOs provide instructive histories of consolidation and acquisi- tion. This case study illuminates how airports manage their FBOs as sophisticated real estate transactions that incorporate demands from customers for a high level of service and constructive management of airport assets. FBO History The history of FBOs at Boeing Field reflects many of the trends present in the FBO industry. In the late 1990s through 2014, three FBOs operated at Boeing Field: Galvin Flying Services, Clay Lacy, and Aero Flight. In 2014, Landmark Aviation bought Galvin. In 2016, Kenmore Aero bought Aero Flight and Signature Flight Support bought Landmark Aviation. By late 2016, the three FBO operators were Clay Lacy, Kenmore Aero, and Signature Flight Support. The airport has historically renegotiated leases with existing FBOs instead of soliciting interest through an RFP process. FIGURE 21 Boeing Field general aviation ramp. Source: Boeing Field/King County International Airport. Attractive Features of an FBO Property According to Mark Witsoe, landside access is a prime concern to network FBOs because they would prefer to control the cus- tomer experience as soon as the customer nears the airport, projecting the FBO brand and service from the curb. In addition, a parcel that allows customers to arrive at the landside terminal without passing a competitor’s FBO is preferable. Continuing the customer experience through the FBO terminal and out to the ramp with covered jet loading areas has become a desirable design feature at new facilities.

61 Repurposing older existing buildings to a network FBOs need is typically more difficult because the building’s curb appeal may not meet current expectations. Hangars with tall doors to fit modern jets are highly desirable; hangars with low doors are not. Lessons Learned about FBO Leases The airport management team has experience with long-term leases, midcourse adjustments, and negotiations for new leases, and offers the following lessons learned. Allow Parcels to Revert to the Airport Sponsor “Many airports have situations where the leasehold of an FBO is composed of several small parcels with different lease expiration dates,” said Randall Berg, citing Boeing Field and Salt Lake City International as two examples. This situation can occur when a larger FBO buys smaller operators and obtains their land leases as part of the transaction. Some FBOs may expect to be able to renegotiate those leased parcels into a single leasehold without going through the RFP process. However, an airport may benefit from consolidating those parcels after they revert to the airport and then offer the consolidated land and improvements through the RFP process. The RFP process may be able to attract an operator that will better use the land or meet the changing needs of the airport and customers. A large consolidated plot often will fetch higher prices through the RFP process than through a negotiated lease. Some FBO buyers purchase leases near the end of their term and then renegotiate a new lease with the airport, thus bypass- ing the RFP process. Some airports historically do not allow leases to revert to the airport if the land or improvements could be offered in a new RFP process. This loss of reverted improvements can affect the airport’s financial position because it cannot lease the improvements as owned property, explained Witsoe. The improvements in a lease renegotiation often remain the property of the lease purchaser. Updated Primary Documents Clarify Goals and Objectives One possible solution when considering a negotiated lease versus an RFP process is to have the airport’s master plan, strategic plan, leasing guidelines, and lease language all align with the same stated goals. This helps clear up the discussion about the airport’s goals and provides guidance for the airport’s board and local government. Plan for Assignment Fees, Appraisal-Based Rate Increases, and Environmental Responsibilities Industry consolidation has caused many airports to include an assignment fee clause in the lease agreement that allows the airport to participate financially in the transfer of high-value leases between private sellers. Another important element of a long-term FBO lease is automatic rate increases tied to an economic metric such as the consumer price index or scheduled appraisal-based updates. This approach allows an airport to collect appropriate rents over the lease term. Last, in the cases of new ownership of a leasehold, the lease should include a clause that makes the new owner responsible for the past owner’s actions concerning pollution, environmental hazards, or delinquent payments. This keeps the leaseholder responsible for remedies. TAMPA INTERNATIONAL AIRPORT, TAMPA, FLORIDA Based on research and an interview with Randy Forister, com- mercial real estate director, and Brett Fay, senior manager of general aviation Airport Overview Tampa International Airport (TPA), located 8 mi west/northwest of downtown Tampa, is owned and operated by the Hillsbor- ough County Aviation Authority (HCAA). TPA is a primary large hub airport with three runways (1L/19R is 11,002 ft, IR/19L is 8,300 ft, and 10/28 is 6,999 ft). In CY 2015, the airport enplaned 9.2 million passengers on 19 international and domestic Tampa International Airport • Traditional FBO leases • Two FBOs—one recent takeover and one acquisition • Useful lessons learned for assignment of leases, take- overs, and acquisitions

62 airlines. TPA has 62 based aircraft: 38 are jets, nine are single-engine, eight are multi-engine, and seven are helicopters (2016 5010 Report). Table 20 shows 2015 operations at the airport and demonstrates TPA’s principal function as a commercial service airport. TABLE 20 OPERATIONS AT TAMPA INTERNATIONAL AIRPORT, 2015 Type of Operation Operations Air Carrier 148,671 Air Taxi 18,943 General Aviation Local 86 General Aviation Itinerant 21,754 Military 0 Total Operations 189,454 Source: ATADS. TPA is part of the HCAA system of four airports. The majority of general and business aviation operations in the area occur at its three GA airports: Peter O. Knight, Tampa Executive, and Plant City. TPA is the only airport in the system with U.S. Customs and Border Patrol; thus, it is the airport of choice for inbound international traffic. Two FBOs operate at TPA: Sheltair and Signature Flight Support. Both FBOs changed hands in 2016. In February BBA Aviation, the parent company of Signature, purchased Landmark Aviation. In this transaction, the Landmark FBO became a Signature FBO. No HCAA approval was required because BBA Aviation acquired Landmark’s parent company, including all assets and leaseholds. Sheltair’s acquisition of Tampa International Jet Center (TIJC), an independent standalone FBO, required a different lease assignment process and is the subject of this case study. TIJC History In 2005, Tampa International Jet Center was a start-up FBO. Its owner had to convince the Airport Authority that TPA could support a second business aviation FBO facility. Persuasion was not enough, as TIJC also had to win an RFP process and deliver on its promises. Ultimately, TIJC prevailed in the RFP process and negotiated a 20-year lease (renewal options were added to the lease via subsequent amendments) on a 16-acre parcel. In its first 10 years, TIJC invested more than $10 million to construct the FBO facility, hangars, and a fuel farm and employed 25 full-time personnel. FIGURE 22 Sheltair/Tampa International Jet Center. Source: AINOnline. TIJC focused on marketing, employee loyalty, and a high level of customer service. The FBO gained an excellent reputation as an independent operator. TIJC was an acquisition target for many small and larger network FBOs; however, the owners decided to pursue a sale on their own terms. The fallout of the Great Recession left an indelible mark, and the presence of the largest FBO network in the world on the airport led to the decision to sell.

63 Because 2016 was a seller’s market for TIJC, the leadership team decided what type of buyer would be a good tenant at the airport, compete effectively with Signature, and have a strong market presence in Florida. Maintaining the TIJC culture and preserving options for employees were also high priorities. Sheltair Acquisition Based on research and previous conversations with Sheltair, TIJC decided the FBO was a good match. The two companies came to agreement and finalized the acquisition. With a contract in hand, Sheltair approached HCAA 90 days before the deal’s anticipated closing date. The assignment clause in TIJC’s lease allowed HCAA to review Sheltair’s financials and approve the lease assignment, and the TIJC manager proposed to run the day-to-day operations of the FBO. Furthermore, Sheltair’s lender requested language in the lease agreement that referenced the loan documents. HCAA wanted to update the insurance requirements and clauses about compliance with FAA policies, standards, and regulations. Both parties wanted the rights and responsibilities of the tenant’s lender to be carefully out- lined in the revised agreement. The Airport Authority reviewed Sheltair’s financial package and agreed to the lease assignment. The parties agreed that the best way to handle the revised agreement was to amend and restate the lease and include all updated language. The review and approval by the authority took place before Sheltair announced the acquisition publicly. Once the deal was complete and approved by the authority, Sheltair’s regional vice president and his staff met with TIJC employees individually to explain the transition. Sheltair also contacted customers of TIJC directly to address their concerns and questions. Sheltair honored all existing tenant agreements and offered tenants and customers additional benefits available through their network of facilities and services. In addition, Sheltair agreed to TIJC’s planned construction of an additional bulk hangar (Epstein 2016a). Lessons for Other Airports Sheltair’s acquisition of TIJC is an excellent example of all parties working together for a good outcome. Randy Forister offered several suggestions for airport sponsors engaged in lease assignments: 1. Every takeover or acquisition of a leasehold has unique characteristics and should be reviewed individually. 2. Ground leases and improved property leases should include an assignment clause that allows the airport sponsor to review the financial fitness of the applicant and the quality of the replacement. 3. Obligations from the previous FBO should carry over to the new tenant. Otherwise, the airport sponsor must contact the old FBO for remedies including environmental cleanup. 4. Sunshine laws can affect the disclosure process. Every state has its own laws about the transparency of a public entity. A private corporation may not want its financial data to become public record through the process of review. 5. When airport assets are included in a lease, a shorter-term lease is appropriate; when significant capital investments are proposed, longer leases make more sense because they give the tenant sufficient time to amortize its investments. 6. Lease assignment also gives the airport sponsor an opportunity to update certain lease terms, including— a. Environmental responsibilities b. Use provisions c. Insurance requirements d. Prohibitions against revenue-producing activities that would normally go to the airport sponsor (e.g., erecting cell phone towers or large solar arrays on leased airport buildings) e. Changes in FAA regulations, guidelines, and policies

64 f. Changes in the airport’s primary documents (e.g., minimum standards, rules and regulations, and leasing policies) g. Rights and responsibilities of the tenant’s lender in the case of default VAN NUYS AIRPORT, LOS ANGELES, CALIFORNIA Based on research and an interview with Jess Romo, Los Angeles World Airports Airport Overview Van Nuys Airport (VNY), located 22 mi north- west of Los Angles, California, is owned by Los Angeles World Airports (LAWA). VNY serves as a reliever airport with two runways (16L/34R is 4,013 ft and 16R/34L is 8,001 ft) and five instrument approaches. VNY has 559 based aircraft: 164 are jets, 258 are single-engine, 77 are multi-engine, and 60 are helicopters (5010 Report, 2016). Table 21 shows operations at the airport over the past 10 years. Like many airports whose core business is corporate and GA, operations have declined significantly in the past decade. Before the recession, VNY had fuel flow levels of about 23,000,000 gal of Jet-A. That volume dropped to 15,000,000–16,000,000 gal during the recession, and then rebounded to approximately 21,000,000 gal in 2016 with a forecast of 21,000,000 gal by 2017. VNY remains in the top 15 U.S. airports ranked by GA operations, and one of the largest airports for based aircraft, many of which are jets and helicopters. TABLE 21 OPERATIONS AT VAN NUYS AIRPORT, 2005, 2010, AND 2015 Type of Operation 2005 Operations 2010 Operations 2015 Operations Air Carrier - - 98 Air Taxi 15,276 9,076 14,538 General Aviation Local 115,248 97,710 67,474 General Aviation Itinerant 280,508 204,158 128,062 Military 285 367 0 Total Operations 411,317 311,311 210,172 Source: ATADS. VNY is a vibrant example of FBO consolidations, LAWA’s use of comprehensive leases, and an FBO real estate program that effectively addresses a changing general and business aviation industry. FBO History Starting in 2006, a wave of FBO acquisitions began at VNY. In 2006, Maguire Aviation purchased Peterson Aviation, and the following year it purchased the Million Air FBO and a Disney hangar. In 2008, Maguire acquired Skytrails Aviation, a family-owned and -operated FBO. That same year, charter and management firm TWC Aviation built a new office and hangar facility at VNY. Following a slow recovery from the Great Recession, FBO leaseholds continued to change hands. In 2013, Signature pur- chased the assets of Maguire Aviation and the Hawker Beechcraft FBO. In January 2013, Pentastar Aviation left its facilities at Van Nuys to focus operations in the Midwest and East Coast. In 2015, Landmark Aviation purchased TWC Aviation. In 2016, Signature acquired Landmark. Van Nuys Airport • Traditional FBO leases • Multiple private FBOs at one of the largest business and GA airports in the United States • Experience with lease assignments, negotiations, and FBO consolidations

65 By 2016, three full-service FBOs were operating from four locations: Castle and Cooke Aviation, Clay Lacy, and Signature Flight Support (east and west). Jet Aviation will begin full-service FBO operations from a new facility in 2018. The FBOs at VNY are spread out geographically and serve aircraft from light GA aircraft to business jets and helicopters. Two airport tenants are self-fueling operators. One is the Los Angeles City Fire Department, a public service entity that has its own fuel farm. The other is The Park at VNY, a fuel co-op that has its own fuel tank on a 30-acre campus dedicated to propeller aircraft operators. In 2016, VNY entered a lease agreement with Jet Aviation for the use of a parcel known locally as the “Old Pentastar” (and Cutter) location. Jet Aviation plans to remove all buildings and build two new hangars and a terminal building. Jet Aviation responded to an RFP issued by LAWA. The VNY RFP included requirements for bidders to provide community benefits, an investment level that adds value to the airport and community, experience as an FBO, and the ability to satisfy the current rents set by LAWA. FIGURE 23 Overview of Van Nuys Airport and adjacent development. Source: Los Angeles Daily News. Leasing Practices Van Nuys airport has been able to participate in lease transfers because the leases have provisions that allow LAWA to con- sent, deny, or negotiate certain terms during the proposed transfers. The terms vary by lease, but the ability to participate in the process allows VNY to protect community and airport interests. Some LAWA master leases allow LAWA to collect a percentage fee based on the leasehold’s value when it is transferred or sold. (See LAWA/Jet Aviation lease section 8.3.)

66 VNY also has nonaeronautical property under lease at appraised rates comparable to commercial rates in the area. VNY generates revenue from building rental (25%), land rental (60%), fuel flow fees (13%), and other sources (2%). As is typical in the industry, the buildings and improvements revert to LAWA at the end of the lease term or are removed by the lessee at the end of the term. Lessons Learned Van Nuys is a case study airport where demand for FBO services and real estate is at a premium. However, even with high demand, VNY has experienced high FBO turnover, mergers, and acquisitions. Two aspects of this experience are noteworthy for airport sponsors negotiating lease terms: 1. Write lease terms that include the right to consent to, deny, or negotiate new terms during a lease transfer, and 2. Include an assignment clause that allows the airport to benefit financially from lease assignments. The airport attributes many of the successful business outcomes at VNY from working closely with airport tenants, the customers, and the surrounding community. FIGURE 24 Signature Hangar (former TWC Aviation Hangar). Source: JRMA Architect and Engineer. WASHINGTON DULLES INTERNATIONAL AIRPORT, DULLES, VIRGINIA Based on research and an interview with Christopher U. Browne, A.A.E., airport manager Airport Overview Washington Dulles International Airport (IAD), located 20 mi west of Washington, D.C., is owned by the Metro- politan Washington Airport Authority (MWAA). IAD is a primary large hub airport with four runways (01C/19C is 11,500 ft, 01L/19R is 9,400 ft, 01R/19L is 11,500 ft, and 12/30 is 10,501 ft) and 25 instrument approaches. In CY 2015, the airport enplaned 10,363,974 passengers on 38 airlines. IAD has 54 based aircraft: 47 are jets, three are single-engine, two are multi-engine, and two are helicopters (2016 5010 Report). The history of GA activity at IAD is connected closely with GA activity at Washington Reagan National Airport (DCA). Itinerant flights predominate GA operations for both airports, with little or no local GA activity shaping the services offered Washington Dulles Int’l Airport • Traditional FBO leases • Two FBOs • Assignment of one lease to Ross Aviation following Signature’s acquisition of Landmark and a Justice Department ruling

67 by the FBOs. Before September 11, 2001 (9/11), GA activity was roughly equal between the two airports. However, following 9/11, GA operations were heavily restricted at DCA and much of the corporate activity moved to IAD, as Figure 25 shows. FIGURE 25 GA operations at IAD and DCA, 1998–2015. Source: ATADS. Total GA operations at both DCA and IAD have declined over the study period. IAD GA operations peaked in 2002 at 81,775; in 2015, there were 37,126, suggesting reduced demand for FBO services over the period. By comparison, DCA GA operations stood at 2,334 in 2002 and at 3,112 in 2015, which is down from a pre-9/11 volume of 59,292 in 2000. Table 22 shows 2015 operations at the airport and clearly demonstrates IAD’s principal function as a commercial service airport. FIGURE 26 Washington Dulles International Airport—night aerial. Source: Metropolitan Washington Airport Authority.

68 TABLE 22 OPERATIONS AT WASHINGTON DULLES INTERNATIONAL AIRPORT, 2015 Type of Operation Operations Air Carrier 164,204 Air Taxi 92,995 General Aviation Local 0 General Aviation Itinerant 37,126 Military 0 Total Operations 294,325 Source: ATADS. FBOs at IAD Signature Flight Support and Ross Aviation are IAD’s FBOs. Dulles has no plans to enlist a third FBO. The master plan does have the FBOs moving to the west side of the airport at some point, and longer leases will be negotiated for those properties if the FBO provider builds extensive improvements. Ross Aviation’s presence on the airfield followed Signature’s acquisition of Landmark Aviation in 2016. With this acquisi- tion, Signature held the leases of both FBO properties. Following a Department of Justice ruling on the purchase, BBA Avia- tion, Signature’s parent company, was required to divest itself of six properties to avoid “a monopoly or duopoly for critical fueling and support services” (DOJ 2016). Landmark’s FBO at Dulles was one of the listed properties. Once Signature purchased Landmark, it was contractually obligated to fulfill the terms of Landmark’s lease. MWAA could hold them to performance of the lease outside of the Department of Justice rulings on the purchase. When Signature was required to assign the Landmark lease to another company, MWAA had approval authority over that assignment per the lease terms. Signature proposed transferring the old Landmark lease and its obligations to Ross Aviation. MWAA investigated Ross the same way it would evaluate an entity competing for an RFP. The Airport Authority needed to be certain that Ross could fulfill the obligations of the Landmark lease and be able to compete effectively with Signature. MWAA examined Ross’s manage- ment team, management plan, and operational plan, and prepared a full evaluation. Ross took over the terms of the Landmark lease with the same fees and contractual obligation to make the improvements that were included in the original lease. Ross retained the local FBO manager and staff from Landmark. The Ross/Landmark lease expires in 2022 and all improvements revert to MWAA. The Signature lease expires in 2017 with improvements also reverting to MWAA. The Signature property will likely be offered in an RFP for a 5-year term to synchronize it with the other FBO property. In 2022, when both leases expire, the authority could then solicit bids for both properties through an RFP process. In 2022, the lease term may be shorter on existing FBO properties until the new west area is open for development. Leasing Process and Lessons for Other Airports MWAA has extensive leasing experience both with the FBOs and with airline and concession agreements. FBO leases have min- imum performance guarantees or require percentage concession fees calculated on FBOs’ gross receipts—whichever is greater. MWAA has prepared a procurement manual that specifies the process for competitive bidding. It is MWAA policy to grant concession opportunities by the competitive bid process in most cases. The bidding structure is explained in the manual and in the statement of work, which is issued with open bids. “Having an early termination process spelled out in the policy manuals and the leases allows the airport to protect its assets from underperforming tenants,” the airport manager, Christopher U. Browne, explained, “and having clauses covering buy- outs and transfers are also important.”

69 Browne also said that assigning a lease results in a chain of responsibility that differs from the chain of responsibility used the granting of a new lease. In some assignments, the responsibility, either financial or environmental, rests with the last person in line to collect from those up the line, and the airport is not required to work with any entities other than the most recent lessees. Issuing a new lease could make the airport responsible for collecting any debts from previous lessees directly. FBO CASE STUDIES The FBO case studies featured in this synthesis include interviews with two multilocation FBO companies, Avflight Corpora- tion and Signature Flight Support, and one single-location independent FBO, D.C. Metro Aviation Services. Although each company provides a comparable array of basic services to aircraft operators, differences arise in the scale of the companies and the advantages they bring to their respective markets. Avflight’s network of small to medium-size FBOs provides an often sole-source entry to its communities. Signature Flight Support’s global scale and high concentration in business destinations appeal primarily to turbine engine operators. D.C. Metro Aviation Services, a single location in Gaithersburg, Maryland, operates a highly personalized, family-owned business directed at single-engine aircraft operators. Avflight Corporation, Ann Arbor, Michigan Based on research about the company and an interview with Carl Muhs, CEO of Avflight Corporation Company Overview Avflight Corporation is a privately owned company and close affiliate of the Avfuel Corporation. Avfuel was established as a fuel supply and logistics company nearly 40 years ago. Avfuel’s fuel network includes over 3,000 worldwide locations and more than 600 Avfuel-branded dealers throughout North America and Europe. Its cus- tomer base includes FBOs, airlines (e.g., Delta Air Lines), corporate flight departments, airport sponsor-owned fuel facilities, freight and cargo companies (e.g., UPS), helicopter opera- tors, and military aircraft. FIGURE 27 Avflight ground handling. Source: Avflight Avfuel has a brand presence at many U.S. airports. As the market for customer service offerings has expanded and become highly competitive, Avfuel has developed a line of systems to support airports and FBOs with adjunct services including— • Avfuel Contract Fuel, less-than-retail rates on jet fuel for aircraft owners and operators • Avplan Trip Support, including flight planning, Advanced Passenger Information System filings, permits for interna- tional travel, and 24/7 weather support • Avsurance, a single-source access point and agent for pilots, airports, equipment manufacturers, distributors, flight departments, and FBOs to acquire insurance • AVTRIP, a loyalty rewards program for customers that purchase Avfuel • Avtank, a subsidiary that designs, engineers, and manufactures fuel storage systems and refueling equipment • Avlease, a subsidiary that provides management and leasing of aviation refueling equipment Avflight Corporation • Network of FBOs • Often sole-source FBO at small to medium-size airports • Initial entry at many airports is as a fuel supplier

70 The Avfuel network supports independent FBOs and airport sponsors that provide fueling services. Avfuel network par- ticipants can benefit from Avfuel’s resources, which include its • Avfuel Rampside System (trucks, equipment, parts and supplies, quality assurance, and training) • Avfuel Front Counter Systems (credit card processing, training in point of sale systems, and customer service) • Avfuel Marketing (marketing and advertising plans, media and trade show support, direct customer communications) • Avfuel Sales System (AVTRIP rewards, contract fuel, leads, sales assistance) These services are available to any FBO or airport sponsor in the Avfuel network. Avflight was formed in 1995 as a wholly owned network of FBOs. Avflight owns 16 FBOs, one located in Ireland, and the rest in the United States. Figure 29 shows the FBOs’ locations: • Akron–Canton Airport, Ohio (KCAK) • Bishop International Airport, Michigan (KFNT) • Capital Region International Airport, Michigan (KLAN) • Cherry Capital Airport, Michigan (KTVC) • Coleman A. Young International Airport, Michigan (KDET) • Durango–LaPlata Airport, Colorado (KDRO) • Golden Triangle Regional Airport, Mississippi (KGTR) • Grand Forks International Airport, MI (KGFK) • Gunnison–Crested Butte Regional Airport, Colorado (KGUC) • Harrisburg International Airport, Pennsylvania (KMDT) • MBS International Airport, Michigan (KMBS) • Monroe Regional Airport, Louisiana (KMLU) • Roswell International Air Center Airport, New Mexico (KROW) • Salina Regional Airport, Kansas (KSLN) • Willow Run Airport, Michigan (KYIP) FIGURE 28 Avflight FBO network, 2016. Source: Avflight, “Avflight Network,” http://www.avflight.com/Network. Avflight’s Business Philosophy Avflight takes a custom approach to acquiring or developing an FBO. Most of its target acquisitions are GA airports or small commercial airports in the United States where the entire airport operations would benefit from a cohesive approach to air- port services. Successful airport–FBO partnerships are built on the idea that both parties identify customer-driven business opportunities and work together, each bringing infrastructure and expertise to provide a solution to the customer. “The FBO is the front door to the community. In addition to being the first impression of the local airport, the FBO is the gateway to the community, the city, and surrounding areas for businesses looking into investment opportunities,” said Carl Muhs, CEO of Avflight. “Building relationships with the airport, current airport businesses, and the local community is a key to putting together solutions that make good business sense for all the parties involved.”

71 Avflight has drawn on the best customer service practices of other hospitality industries, particularly hotel and hospital. Avflight examines the ways these businesses distinguish themselves and provide great customer service, then adopts practices that can create an outstanding FBO experience. “Executive travelers often look for comfort, value, and quick action to solve issues,” said Muhs. “By starting with the flight dispatchers and schedulers and by providing turnkey solutions, Avflight is able to showcase its ability to provide everything the traveler will need on the journey.” FIGURE 29 Avflight Saginaw terminal. Source: Avflight. Solutions Provider “The FBO industry has become much more specialized than in years past,” said Muhs, and “the customer experience—which the Avflight FBOs strive to meet—has also changed.” Customer expectations vary by market and sometimes by season. Sum- mer travelers to Colorado’s mountains will have different expectations than winter visitors. Enjoying the famous beaches of Lake Michigan has different requirements than high-altitude testing of new aircraft. Avflight works with each airport indi- vidually to identify the need, create a business-smart solution, and deliver the most relevant and needed products and services. Below are some additional examples of the custom approach. • When MBS International Airport (Saginaw) was soliciting commercial air service, it received a 12-page list of required ground service equipment from an airline. Avflight was able to provide all the requested equipment. • Aircraft manufacturers perform some of their high-altitude testing at Gunnison Crested Butte Regional Airport (alti- tude 7,700 ft). Avflight Gunnison received a 15-page list of requested support equipment that the FBO needed to fulfill for the manufacturer. • Avflight Roswell often works with airlines that need to store unused aircraft and with aircraft manufacturers that are testing their new models. • Avflight Flint is an FAA-approved Computer Testing Center where applicants can take Airman Knowledge exams. FIGURE 30 Avflight Saginaw hangars. Source: Avflight. Suggestions from the Avflight CEO Effective Airport–FBO Partnerships “Successful airport–FBO partners don’t just sit around the airport waiting for customers to show up,” said Muhs. “They reach out to the customer and cultivate relationships that include the combined benefits of the airport (maybe high altitude testing or

72 dry-climate storage) and its FBO’s services to create a turnkey package that supports the customer.” Airports excel at manag- ing infrastructure and maintaining pavements, buildings, and common areas; FBOs are well suited to the customer contact role and can provide ground handling, into-plane fueling, and other mobile services. Advantages of New Leases “In a situation where one FBO buys another FBO, it is good business practice to investigate the lease and assess how the economic climate has changed since it was written. Negotiating a new lease to suit a new FBO operation may be better than trying to make an old lease work with a new airport–FBO relationship. “New FBO leases require 5 years of advance planning. Airport sponsors should examine current industry trends and con- sider how an airport might create a situation that serves those trends. Devoting a lot of time to an RFP that no one responds to is wasteful. Spending time positioning the airport’s offer in a way that an FBO business can invest with the expectation of fair return is critical to a successful offering process. Airports can reach out to the FBO industry to learn what trends are important and then craft an offering that will be better received.” Review Minimum Standards “Occasionally an airport’s minimum standards are outdated enough that they create an obstacle to FBO investment. In these cases, the airport could assess its market and create a set of standards that are more closely aligned with what customers are expecting and what businesses can sustainably deliver.” Selecting New FBO Locations Avflight looks at many FBO opportunities (RFP or unadvertised) with a focus on the airport’s assets—traffic, runway length, airline service, base tenants, military contract, or some unmet need or market. The company builds relationships with the airport, current businesses, and the local community to see if they can put together a solution that makes good business sense for all par- ties involved. It takes time to build the relationships and identify the assets that will come together to create a smart business plan. FIGURE 31 Avflight ground crew, Durango, Colorado. Source: Avflight. D.C. Metro Aviation Services, Gaithersburg, Maryland Based on research and interviews with Sandy Poe, owner and general manager of D.C. Metro Aviation Services, and Keith Miller, airport manager, Montgomery County Revenue Authority (MCRA) Airport Overview Montgomery County Airpark (GAI), located 3 mi northeast of Gaithersburg, Maryland, and 27 mi north of Washington, D.C., is owned by MCRA. GAI is a GA airport with one runway (14/32 is 4,202 ft) and three instrument approaches. GAI has 153 based aircraft: three are jets, 133 are single-engine, 16 are multi-engine, and one is a helicopter (FAA Form 5010 Report, December 2016). D.C. Metro Aviation Services • Single-location independent FBO, family-owned business • Long-term lease • Real estate revenues contribute heavily to the FBO’s bottom line

73 FIGURE 32 FBO Hangar opening day, 1960. Source: D.C. Metro Aviation Services. Key Findings D.C. Metro Aviation Services is an excellent example of a thriving single-location, family-owned FBO operating at a GA airport. Real estate is a primary source of revenue for the FBO. It owns and manages the buildings, including 70 T-hangars, seven corporate hangars, approximately 125 tie-down spots, and the fuel farm. FBO History The family-run FBO began operations at GAI in fall 1960. Following a shared passion for aviation, the grandfather (William Richardson) and father (James Richardson) of the current FBO manager/owner (Sandy Poe, née Richardson) started Freestate Aviation, the first FBO at the airport, with their partner Richard Kreuzburg. The FBO operated a flight school, Part 135 char- ter, an avionics shop, a radio, and aircraft maintenance services; flew airmail for the U.S. Postal Service; rented hangars and tie downs; and sold fuel. The founders managed the FBO from 1960 until 1978. Between 1978 and 2011, the FBO operation was subleased to Gibson Aviation, Flight Resources, and Montgomery Aviation, in turn. In 2011, Sandy Poe brought the FBO back in-house under the name D.C. Metro Aviation Services. FIGURE 33 FBO hangar, Montgomery County Airpark. Source: D.C. Metro Aviation Services.

74 Focus on Customer Service D.C. Metro’s business philosophy is based on service: service to the community where it is located, service to the broader com- munity, and service to the customers who visit it. D.C. Metro Aviation Services officially opened for business in January 2011, but the general manager, Poe, had begun the marketing campaign for the new FBO more than 2 years before opening day. Having worked in human resources for over 17 years, Poe knew the importance of customer service and building relation- ships. She started talking with fuel suppliers and FBO software management companies, and attending conferences. Then she began to contact the aircraft owners who were based at the airport and the pilots who flew into GAI. Her early outreach focused on learning what the customers wanted and letting them know that those positive changes would be coming soon. Her information gathering and marketing efforts were accomplished primarily through personal contact with potential customers as well as by word of mouth. Poe’s efforts resulted in a 35% increase in business revenue the first year. “Before we opened for business,” she shared, “D.C. Metro renovated the FBO building and trained our personnel in the most current practices for customer service excellence.” To stay at the forefront of exceptional customer relations, the FBO promotes an environment where customers and employees are encouraged to make suggestions—knowing that their ideas will be valued and considered. “About 40%–50% of our business revenue comes from operations directly related to the FBO—excluding hangar rentals,” explained Poe. “I estimate that about 85% of fuel sales are to nonlocal customers flying in for regional events like golf tourna- ments, lacrosse tournaments, and special events related to Washington, D.C.” The FBO has a 24,000-gal fuel farm (12,000 gal of Jet-A and 12,000 gal of 100LL), a 750-gal 100LL fuel truck, a 3,000-gal Jet-A fuel truck, and a self-service 100LL fueling pump located near the main ramp. The FBO flows approximately 175,000 gal of Jet-A and 150,000 gal of 100LL every year. When customers purchase 100 gal of fuel, the FBO waives the ramp fee; a fuel purchase of 250 gal or more can earn a free lunch at the airport restaurant. The FBO has an agreement with contract fuel providers that allows fractional ownership planes or others with contract fuel agreements to service their fueling needs. Most jets take on as much fuel as they can—given their passenger load, the runway length, and surface conditions. Limiting factors at GAI are the runway length and its pavement surface. If the runway were longer or had grooved concrete, jets would be better able to use the airport in wet-pavement conditions. As it is, those conditions limit the airport’s utility when the pavement is not dry. Hangar and building rental accounts for a major portion of D.C. Metro’s revenue. D.C. Metro leases 38 acres of land and owns the buildings thereon. “All 70 T-hangars and seven corporate hangers are under lease,” Poe explained, “and we have a significant waiting list. As a result, we are planning to build several more community hangars that will be able to accom- modate the larger wingspan of newer aircraft as well as larger aircraft in the small-jet to large-turboprop category.” The FBO benefits from a prime location near the nation’s capital, a secure and stable hangar leasing operation, and sizable fuel sales to transient and local customers. FIGURE 34 Bill Richardson speaking at FBO’s first open house. Source: D.C. Metro Aviation Services.

75 Open House and Hospitality Programs GAI hosts an annual open house for the benefit of local pilots and the surrounding community. The well-attended event brings the local community and the airport together to highlight the many ways in which the airport contributes to the community. The benefits of GAI and its FBO are both economic and societal. Local pilots donate their skills and aircraft to charities like Veterans Airlift and Angel Flight. The airport also contributes over $11 million to personal incomes in the area and $11 mil- lion to local business revenues, and it generates almost $1.2 million in tax revenue each year. D.C. Metro has been family friendly and family run for the past 57 years. It regularly co-hosts events with The Airport Café, and community-building events take place on a regular basis. “We host community get-togethers where local par- ticipants join in game nights,” shared Poe, “and we also promote safety-related trainings and events for local pilots.” The FBO keeps track of nonpilots who wish to participate in community activities and keeps them informed of upcoming events through an e-mail list. “One of our favorite activities is playing host to school field trips,” Poe explained. “This is the sort of place where you can take your kid to see a plane up close, and maybe even get to sit in one on a Saturday afternoon.” D.C. Metro is, in essence, a neighborly member of the community. Charity Programs D.C. Metro has long been active in charitable endeavors. For example, in one program the FBO donates $20 for every fuel purchase of 250 gal or more. They also have Free Cookie Fridays, where, right next to the cookie plate (not by coincidence), is an opportunity to donate to the Wounded Warriors program; more than $600 was raised in 2015. D.C. Metro also supports the local pilots who donate their time, skills, and aircraft to charities like Veterans Airlift and Angel Flight. Working with the Airport Sponsor MCRA is a public corporation established to construct, improve, equip, furnish, maintain, acquire, operate, and finance proj- ects devoted wholly or partially for public use, good, or general welfare (http://www.mcra-md.com). MCRA is the airport sponsor. It works with the FAA and the state of Maryland to obtain grant funding for improvement projects. MCRA answers noise questions and takes comments from the community while working with local business leaders and politicians to keep them informed and up to date on the contributions the airport makes to the community. The FBO focuses on outreach to the flying public as well as to the surrounding community. The airport sponsor and the FBO work together to promote GAI and answer questions about its operation. D.C. Metro Aviation Services runs most of the airport’s day-to-day activities and is active in solving issues related to many of GAI’s services and facilities. MCRA maintains the airfield, roads, and other infrastructure and is responsible for snow removal and the fire hydrant system. MCRA collects ground rent from D.C. Metro, a based aircraft fee, and fuel flowage fees. FIGURE 35 Community BBQ on opening day. Source: D.C. Metro Aviation Services.

76 Tenants The FBO coordinates with other service providers, including several aircraft maintenance businesses (GAI Aircraft Services, Deblois Aerospace, and Paragon Detailing), a flight school, Washington International Flight Academy, and The Airport Café. These businesses are tenants of the FBO and provide services to the airport’s based and transient customers. Signature Flight Support, Orlando, Florida Based on research about the company and an interview with Mary Miller, V.P., Industry and Government Affairs, Signature Flight Support Company Overview Signature Flight Support traces its lineage to the early days of aviation as aircraft began to transform from novelty showpieces to capable designs that harnessed the utility of speed and payload. Page Airways, founded in 1938 in Roch- ester, New York, was a traditional FBO. In this early era, FBOs provided light aircraft rentals, charters, service, and fuel and often were responsible for the entirety of their airfield’s operations and upkeep. At the onset of World War II and the U.S. government’s foresight that a pool of qualified aviators would be essential to match the industrial output of aircraft produced, Page provided flight training as a designated civilian pilot school that prepared young men and women to fly military aircraft. FIGURE 36 Signature Flight Support corporate hangar. Source: Signature Flight Support website, https://www.signatureflight.com/. After the war, Page Avjet (as the company was rebranded) diversified its business ventures, taking advantage of the preva- lence of turbine-powered aircraft that vastly expanded the utility of air transport. From the 1940s to the 1980s, Page Avjet grew to five business units, encompassing aircraft sales, aircraft component engineering, ground equipment refurbishment, aircraft management, and a network of high-value FBO locations. Comparably sized and eponymously named Butler Avia- tion, started in 1945 by famed polo player Paul Butler, had reached a peak of 26 FBOs in the 1980s. In 1992, both chains were brought together under the name Signature Flight Support by parent company BBA Aviation. Signature launched an aggressive expansion campaign from its initial portfolio of FBOs, adding several smaller networks during the next 20 years including AMR Combs in 1999 and Executive Beechcraft in 1998, culminating with the largest acquisition in the history of the FBO industry as Landmark Aviation’s 64 locations were merged into the Signature network. Airports Served Signature Flight Support operates at over 200 locations across the world, including over 130 locations in the United States. Other key countries include the United Kingdom, France, Germany, Italy, Singapore, and South Africa. Additional locations are marketed under the Signature umbrella via strategic partnerships, including FBOs and handlers in such countries as Bra- zil, Hong Kong, and Austria. Furthermore, independent FBOs can affiliate their location and access Signature services via the Signature Select program. Signature Flight Support • Largest FBO network by far • Full FBO services that cater to business aviation • Network has expanded through acquisitions, internal growth, and affiliations with independent FBOs (Signature Select)

77 Key Findings Signature’s value proposition to its user base relies on the provision of the highest quality in aircraft ground handling ser- vices, unrivaled compassion within customer experiences, leading network benefits, and consistency as an aircraft handler. Although the network may be significantly sized, each Signature FBO is expected to expend the utmost in energy and enthu- siasm at a local level. Additional value is added for visitors through industry-leading loyalty programs, the leveraging of technology to improve and personalize the transaction process, and the competency of its ground crews with frequent safety training (which serves to protect million-dollar assets in the form of private aircraft). Signature is also involved at a local level with the airports it serves, as an FBO is often the front door of a community to those flying privately. By collaborating with airport authorities, aircraft owners and operators, and community groups, coupled with the upfront investment in such airport infrastructure as aircraft parking ramps, terminal and hangar facilities, and fuel farms, each Signature location pursues prosperity under its own unique conditions. Network Benefits Collaborative benefits are yielded from the alignment of over 200 FBOs, which means significant advantages are associated with choosing a Signature FBO. Networkwide safety programs and formal training methodologies aim to ensure that an aircraft will be handled to the same exacting standard no matter the location. Furthermore, a unified point-of-sale system expedites and standardizes transactions. However, some of the biggest tangible benefits result from the Signature Loyalty component, which encompasses two customer-facing programs: • Signature TailWins, which awards customers points for fuel and handling purchases that can be redeemed for gift cards • Signature Status, which measures the number of times an aircraft visits a Signature location against a competitor and assigns a loyalty score, which puts operators into a tier; the higher tiers have more privileges, including discounted services and priority ramp parking. Diversified Services Signature also offers additional and complementary services that FBOs can offer through network affiliation, including: • Signature ELITE Class, in which commercial airline passengers are transported through the FBO to give a private avia- tion–level experience at selected airports • Signature Flight Support Aviation Card, which is accepted by major aviation merchants and awards TailWins points for transactions • DCA Access Standard Security Program, which allows access to business aircraft operators at DCA, where Signature operates the sole FBO • Signature TECHNICAir, which provides aircraft maintenance, interior refurbishment, and aircraft upgrades at 18 locations Criteria for Market Entry Entry into an airfield’s marketplace is considered on an individual basis, and significant effort is expended to ensure that an FBO’s operation at a particular airport would be a good fit with the airport’s overall organizational objectives. Points that are explored in depth include the following: • Traffic volume at an airfield and how it will translate to fuel gallons • Required investment in the facilities and equipment, either by renovating an existing terminal or developing a new facility from the ground up • Long-term financial viability of the location and the length of the lease on the property • Competitive environment on the airfield and in the surrounding area From the company’s perspective, population centers where a significant volume of air traffic occurs typically will best fit the profile of a worthwhile investment. An alternate entry method would be to purchase an existing FBO and assume its facilities and the remainder of its lease term.

Next: CHAPTER SIX Conclusions »
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TRB's Airport Cooperative Research Program (ACRP) Synthesis 86: Airport Operator Options for Delivery of FBO Services explores the local considerations that go into deciding how fixed base operator (FBO) airports provide fueling, flight continuation services, maintenance, and concierge services. This synthesis also explores the tools that airports use to evaluate which options work best for airports. Broadly speaking, an airport sponsor can deliver FBO services with traditional third-party leases or by engaging a contract manager, or the airport can self-operate the FBO. Decisions about which model is appropriate hinge on an evaluation of an airport’s unique local economic conditions, the details about the area’s general aviation market, and the level of interest private FBOs express about operating at a particular airport.

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