Airport Operator Options for Delivery of FBO Services (2018) / Chapter Skim
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Pages 33-43
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From page 33... ...
33 CHAPTER FOUR THE FIXED BASE OPERATOR LEASE A lease is a complex legal document that creates rights and obligations that will affect the airport sponsor and the fixed base operator tenant for many years. Consequently, the lease must anticipate and address significant changes that, although not expected, could occur during the lease term.
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From page 34... ...
34 FBO LEASE TERM The lease's term should relate to the level of capital investment by the FBO as required by the airport sponsor. Major investments can require up to 30 years or more to be amortized.
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35 • Doing anything that may conflict with 14 CFR Part 139 Airport Certification, as amended periodically, or jeopardizing the airport's operating certificate • Doing anything to create electrical or electronic interference of communications between the airport and aircraft or between aircraft and any navigational aids • Doing anything that may conflict with 49 CFR Part 1542 Airport Security or the TSA-approved security plan for the airport • Engaging in any business activities not specifically permitted by the lease COMPETITIVE FUEL PRICING STANDARD Use of the leased premises should include the right to sell aviation fuel at competitive prices. When developing the lease, some airport sponsors include a competitive pricing standard to prevent price gouging; for example, "Fuel prices will not exceed the average aviation fuel price for airports within 50 or 100 miles based on the AirNav website." This provision will work best with Avgas pricing.
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From page 36... ...
36 Periodic Leased Premises Inspection Many leases provide for an airport sponsor to inspect periodically the leased premises to determine the FBO's compliance with the maintenance and repair obligations of the lease. Annual Maintenance and Repair Report Leases often require the tenant to provide annual reports detailing the prior year's maintenance and repairs and providing a maintenance and repair plan for the upcoming year.
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37 Adjustment by appraisal reflects the actual condition at the airport and the actual value of airport land and is, therefore, many airport sponsors' preferred means for ground rent adjustments. Adjustment by Consumer Price Index or Other Indices Second, the lease may allow periodic adjustments based on increases in the CPI.
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38 The airport sponsor sets the fuel flowage fee rate for each type of aviation fuel sold by the FBO. After giving notice to the FBO, the airport sponsor should periodically adjust flowage fees.
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39 a mutually agreeable solution, which may or may not be successful. Ultimately, the FBO might file for bankruptcy.
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40 TAXES AND ASSESSMENTS A lease should hold the FBO responsible for paying all taxes (both real property and personal property taxes) and assessments and for keeping leased premises free of liens.
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41 d. Personal injury e.
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42 The FBO also should be obligated to pay all civil and criminal penalties that it assesses for any violation of these rules and regulations. The airport sponsor may wish to specifically require compliance with the following: • The Illegal Immigration Reform and Immigration Responsibility Act of 1996, as amended, including use of U.S.
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From page 43... ...
43 The lease should also provide that the FBO's abandonment of the leased premises or failure to conduct the agreed to FBO business on the leased premises for a specified period will constitute a default event, entitling the airport sponsor to terminate the lease and retake possession of the leased premises. Other common default events include a bankruptcy filing by or against the FBO or the appointment of a receiver or trustee for the FBO's property, but such provisions may or may not be enforceable under federal bankruptcy law.
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