FBO LEASES RAISE QUESTIONS

FBOs nationwide are asking whether that are fairly represented in the leasing process.

That big question is being asked, in part, because of issues raised publicly by Paul Fournet Air Service Inc., which was unable to renew its lease at Lafayette Regional Airport in Louisiana last year.

As property values around airports continue to rise, FBOs are seeing these fluctuations seep into property negotiations and contracts, which are often created by airport authorities.

Dealing with airport authorities is one of the top five challenges facing members of the Independent Fixed Base Operators Association (IFBOA), said John Wraga, the organization’s executive director.

“The problem stems from the amount of money FBOs are selling for at certain airports,” he said. “Authorities see these numbers and figure that the FBOs under the lease are undervalued and try to increase rental and commission fees when it's time to renegotiate. In some cases, the authorities are right. Some leases were negotiated decades ago when rates were low and were even discounted further by airports, which lacked service providers, in an effort to attract one.”

How can FBOs better prepare for a negotiation? Be prepared to bring in a third party, which can help verify market rates and understand variables used in the lease formula.

Authorities owning FBO property can use a range of variables, which makes it hard to quickly strategize a negotiation. On a Web site designed to document its experience, the Lafayette FBO outlines “a very biased lease process” that was affected by how fuel flowage fees were charged.

The IFBOA has helped several members negotiate their leases, Wraga added.