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Suggested Citation:"VII. CONCLUSION." National Academies of Sciences, Engineering, and Medicine. 2019. Legal Issues Relating to Airports Promoting Competition. Washington, DC: The National Academies Press. doi: 10.17226/25479.
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Page 33
Page 34
Suggested Citation:"VII. CONCLUSION." National Academies of Sciences, Engineering, and Medicine. 2019. Legal Issues Relating to Airports Promoting Competition. Washington, DC: The National Academies Press. doi: 10.17226/25479.
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Page 34

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Revised November 2019 ACRP LRD 37 33 services, make improvements, and/or maintain facilities, the airport sponsor must consider these requirements when evaluating if air- port fees are reasonable.326 Essentially, this states that if the sponsor complied with its obligations to include the provisions in its FBO agreements, then a mechanism exist for the sponsor to get involved in situa- tions where FBO pricing may be at issue. In June, 2018, the FAA put a finer point on this issue when it dismissed AOPA’s unreasonable pricing informal claims against the Greater Asheville Regional Airport Authority and Monroe County, Florida (the sponsor of Key West International Airport).327 The FAA determined that the sponsors reasonably concluded that the FBO’s pricing practices were reasonable and that AOPA had not provided any evidence that would jus- tify “second-guessing” the sponsors’ conclusions. The FAA also found that Signature, the FBO at both airports, is entitled to set its fees and pursue a business model that provides a reasonable return of its investment. Practically, having the sponsor act as “price police” is some- thing that few airports wish to do and acting in such a role im- plicates a complicated set of challenges (ranging from what is the relevant market from which to judge “reasonable” pricing and to what extent does FBO profitability factor in to such an analysis). Indeed, by citing to the eight factors in the FBO Q&A, the FAA acknowledges that pricing is a complex area and one that a one-size-fits-all solution is not appropriate. Its decisions in the AOPA Complaints only further underscores that point. How to adequately and appropriately get involved in pricing disputes is beyond the scope of this research document. How- ever, airport sponsors are well-advised to gather as many facts as possible and involve all stakeholders in the process so as to have the highest potential for devising an adequate solution. VII. CONCLUSION As demonstrated herein, competition among air carriers and FBOs at U.S. airports is a complex, multidimensional and evolving topic. The federal government has created a broad and general framework within which airport sponsors must oper- ate. However, issues with respect to competition at any partic- ular airport are, by their very nature, highly dependent upon local concerns, services and other factors that require locally- derived solutions. Terms such as “reasonable,” and “not unjustly discriminatory” are bedrock guiding principles but offer little concrete guidance to airport executives when faced with com- petition issues at their airport. Furthermore, when the general standards are interpreted and applied by a governmental agency or a court, the decisions are often fact-specific and the only solid 326 Id. at 3. 327 See, Letters from Heather A. Haney, supra note 82. Prior to those decisions, AOPA withdrew its complaint against the Illinois Depart- ment of Transportation and its sponsorship of the Waukegan National Airport. Joe Kildea, AOPA, Credit Where Due: Progress Leads AOPA to Withdraw FAA Complaint Against Waukegan Airport (Jan. 31, 2018), https://www.aopa.org/news-and-media/all-news/2018/january/31/ credit-where-due often times higher than at a General Aviation (GA) only airport. FBOs at smaller airports may have lower overhead due to fewer airport requirements, but may struggle to remain financially viable due to fewer customers. Issues surrounding fuel pricing recently rose to such a level that AOPA filed a series of informal complaints with the FAA under 14 C.F.R. Part 13, alleging that airports with single FBOs were violating their Grant Assurance obligations by permitting those FBOs to charge unreasonably high fuel prices and for bundled services that users did not want or need.324 In AOPA’s view, the pricing practices of FBOs at these airports effectively amount to an access restriction for transient GA users which, AOPA alleges, the sponsor has a duty to resolve under its AIP Grant Assurance obligations. Indirectly referencing the AOPA Complaints, the FAA at first responded by issuing a “Question and Answer” document that attempted to outline the issues and potential solutions for several situations.325 Most relevant to the issues addressed herein concerning pricing was the answer to Question #3: What is the Nature of the Airport Sponsor-FBO Relationship in Regard to Airport Fees and Reasonableness? Generally, an airport sponsor-FBO relationship is a landlord/ tenant relationship, governed by the contractual terms of a lease agree- ment. The terms of that relationship, to the extent necessary for the airport to remain in compliance with its grants, may be subordi- nated to the grant assurances. There is discretion on how these fees are assessed and collected. Some airport sponsors assess and collect fees, while others assess and permit the FBO to collect the fees on its behalf. Airport sponsors are obligated per Grant Assurance 22 to ensure the fees imposed upon users are reasonable and non- discriminatory. Airport sponsors cannot waive their Federal obligations via terms in their FBO leases or agreements. Airport sponsors should be pre- pared to consider claims of unreasonable and discriminatory ser- vice and unreasonable and discriminatory prices by FBOs. Airport sponsors can manage and may affect the quality and pric- ing of services on the airport through a competitive procurement process and open communications with proposed or selected FBOs. Additionally, periodic review of FBO fee schedules may be an effec- tive way to ascertain the levels and pricing of services being pro- vided at the airport. However, it is important to keep in mind that airport sponsors may take into account additional factors that can influence pricing, including (1) capital investment of the FBO in physical facilities; (2) long-term financial commitment to operate an FBO; (3) positive economic impacts the FBO may have at the airport; (4) prevailing labor supply and corresponding rates, fuel in- ventory levels, and costs; (5) Federal and local policy requirements; (6) insurance requirements; (7) safety and related technical training initiatives; and (8) increases in rents and other fees paid by the FBO. These factors may impact the economic vitality of an FBO. When setting and monitoring rates, airport sponsors must give consider- ation to airport development policies and priorities. For example, in cases where the airport sponsor requires FBOs to offer certain 324 See, AOPA Complaints, supra note 78. More recently, the organi- zation threatened similar litigation against ten other airports on its so- called Airport Access Watch List, announced in April 2018, but has not yet taken any further steps down that path. 325 FBO Q&As, supra note 16.

34 ACRP LRD 37 Revised November 2019 conclusion an airport sponsor may draw is, as the saying goes, “if you have seen one airport, you’ve seen one airport.” However, as described above, airport sponsors have many tools at their disposal to address competition concerns that may be present at their airport and/or within the region in which the airport operates. Crafting solutions that will work for all stake- holders, both practically and legally, is by design a customized and artistic endeavor. The key to success is to fully understand the potential legal and practical pitfalls, appreciate the core fac- tual challenges of all involved, and be able to bring to bear the available tools to address the issues. It is hoped that this Digest aids the reader in that endeavor.

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TRB's Airport Cooperative Research Program (ACRP) LRD 37: Legal Issues Relating to Airports Promoting Competition explores permissible means and methods of encouraging and accommodating competition at U.S. airports. It discusses the history of how competition has been addressed by government and airports and provides the context of the concentration of air carriers and fixed-base operators (FBOs), the accommodation of air carriers with differing business models, and avoiding the grant of exclusive rights when aeronautical service providers merge.

Competition among airlines and FBOs at U.S. airports presents a myriad of issues for the airport sponsor, its executives and for local elected officials—all of whom themselves often face multidimensional challenges and needs. U.S. airports, and especially those which have used federal airport improvement funds, operate within a unique atmosphere.

Congress, through the enactment of airport funding legislation, created a broad and general framework within which airport sponsors must operate. Much of this general framework has been supplemented by United States Department of Transportation / Federal Aviation Administration and provides airport sponsors with some further guidelines within which airports must operate. This framework/guidance, however, relies largely upon general standards such as dealing with airlines and FBOs in a “reasonable” and “not unjustly discriminatory” manner. Given this fact, the resolution of competition issues at any particular airport is necessarily highly dependent upon the locally derived factual context and, therefore, requires locally derived solutions.

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