FBO Success: FBO Tie-Down Space, Another Golden Egg Opportunity

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FBO Tie Down Space

Credit: fikretozk

Multi-Part Series on The 7 Immutable Elements of Building Equity in Your FBO Enterprise

If you want to maximize your ground lease return on investment, don’t overlook the value of your tie-down space. It’s an opportunity to add one more golden egg to your nest of income producers: Hangar Space, Office Space and Tie-down Space.

We call it the trifecta of recurring income that will produce a passive source of revenue for months and years to come for your FBO.

To help guide you in securing a beneficial tie-down space agreement, here is a checklist of do’s and don’ts to keep in mind:

  • Do execute a tie-down agreement for every aircraft owner/operator that requests short-term or long-term tie-down space. This protects both you and the tenant in case of insurance claims. For overnight transient customers where an agreement may be too cumbersome, it is recommended that a short but inclusive waiver be signed.

  • Don’t give away the true value of your tie-down space. Remember that you are paying a ground lease rate for this space, not to mention the cost of upkeep, insurance and the labor to move these aircraft in and out of position upon request.

  • Do maintain your tie-down space. Make and keep this space attractive to current and potential tie-down customers. That includes maintaining tie-down ropes. A neglected tie-down space sends the wrong message.

  • Don’t  lease tie-down space to customers with derelict aircraft. Too often we see tie-down areas littered with aircraft that are in need of repair. That includes flat tires, missing engines, propellers, parts, etc. Make sure your agreement includes language regarding maintaining the airworthiness of aircraft in the tie-down area. Also, do not allow major aircraft maintenance to be performed in the tie-down area, either by the owner or a third party.

  • Do write your tie-down agreements to include flexibility with regards to the term of the lease. You can make the agreement month-to-month or evergreen (meaning the agreement renews automatically for a specified time, such as annually). Also, include language that allows you to terminate the agreement upon a 30-day notice.

  • Don’t discount your tie-down space based on promised aircraft fuel sales. As with your hangar agreements, you should work with your tenant to establish monthly fuel sales goals, and put it in writing. You should review these amounts frequently and include provisions in the agreement to escalate tie-down rates if consistent fuel sales goals are not met. 

Please keep in mind that tie-down agreements are also a sublease and must conform to your master lease agreement with the airport authority, just like your hangar and office lease agreements. Consequently, it is the right of the signatories of tie-down subleases to know the contents of your master lease in order to comply with its contents.

In addition, any terms or rate increases outlined in your tie-down sublease agreement should be similar to your master lease and the term of the sublease cannot be longer than the master lease term.

In our next blog post, we’ll finish up our tenant agreements discussion by delving into the rule and regulations section of crafting these types of agreements.  

ABOUT THE BLOGGERS: John Enticknap (404-867-5518) has more than 35 years of aviation fueling and FBO services industry experience and is an IS-BAH Accredited auditor. Ron Jackson (972-979-6566) is co-founder of Aviation Business Strategies Group (ABSG) and president of The Jackson Group, a PR agency specializing in FBO marketing and customer service training.

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