FBO Success: Protecting Your Golden Eggs

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

Now that you have your three golden eggs nicely arranged, lease agreements for Hangar Space, Office Space and Tie-down Space, there’s one last section of the lease documents that should not be overlooked. It’s the rules and regulations section that offers you protection should one of the parties in your agreement defaults.

One of the purposes of this “rules and regulations” section is that it lays out the expected performance of both parties, the lessee and lessor.

The following is a list of questions you should ask of your tenant, and make sure this language is used in your rules and regulations section.

Is your aircraft airworthy? It’s important to stipulate in all agreements that aircraft, either in a hangar or a tie-down area, must be in airworthy condition. This includes keeping tires inflated and free from other obvious maintenance issues.
Do you have aviation liability insurance? We recommend that your tenant have at least $1 million in coverage.
Do you expect to drive your vehicle on the ramp? If the answer is yes, they must comply with the airport’s safety and security requirements as well as your FBO training and insurance policy standards.
Do you plan to do maintenance on your aircraft? (either in a hangar or in in a tie-down space) Our advice is not to allow maintenance on the aircraft unless you authorize the specific maintenance to be performed in writing. We’ve seen all sorts of aircraft in various stages of being repaired to include parts, tarps and other “junk” piled up.
Do you intend to comply with the terms and conditions of our FBO master lease? Have a frank talk with your tenant and make sure they know about the terms and conditions in your master lease. Better yet, provide them with a copy to read.
Are you wanting to fuel your own airplane? Unless you have a self-serve fueling station set up, you should specify that any fueling of aircraft is restricted to being performed solely by your FBO.
Are you planning on towing your own aircraft? Aircraft towing movements should be restricted to trained FBO personnel only.
Are you expecting any free services such as office services? The rules and regulations section should detail the specific services tenants will receive. Office tenants should not expect the FBO to provide free office services such as copy, fax, phone answering, etc.
Do you know our regulations for receiving guests or visitors? Hangar and office tenants should be apprised of any regulations concerning controlled access points for guests or other visitors.
Do you plan to be on the premises after our normal operating hours? Tenants should understand the restrictions that you have for being on the premises after normal operating hours. We have seen cases where tenants have “moved in” to their leased space, setting up on-site living accommodations.
Do you have a pet or animal that you plan to bring onto the premise? Hangar and office tenants should also be made aware in writing of any restrictions regarding pets/animals on premise.
Have you read our indemnification clause in your agreement? Your agreement should include a good indemnification clause for your protection.

There are many factors and nuances to developing a rules and regulations section of a lease that we will not be able to cover in the blog. Therefore, we encourage you to attend one of our NATA FBO Success Seminars where we spend additional time discussing these important topics as well as others.

As always, have your legal counsel review your 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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