Single FBO Airports: Is There an Impermissible Exclusive right? What Can You Do About It?
Airports that are federally obligated, meaning they received federal grants through the Airport Improvement Program, are precluded from granting “a power, privilege, or other right excluding or debarring another from enjoying or exercising a like power, privilege or right.” FAA Order 5190.6B, §8.2. “An exclusive right may be conferred either by express agreement, by imposition of unreasonable standards or requirements or other means.” Id. Often, airports having only one FBO are subjected to scrutiny as to whether an impermissible exclusive right has been granted by the Airport Sponsor. The Federal Aviation Administration (FAA), however, states “[T]he fact that a single business or enterprise may provide most of all of the on-airport aeronautical services is not, in itself, evidence of an exclusive rights violation.” FAA Order 5190.6B; See also Robinson Air Crane, LLC v. Saint Lucie County, FL, FAA Docket No. 16-18-02 (Director’s Determination, July 19, 2019)(2019 WL 10272358). The purpose of this article is to assist in evaluating whether an airport having a single FBO may actually be an impermissible exclusive right and what can be done to correct it.
Is there an impermissible exclusive right?
The FAA in Order 5190.6B and through its Part 16 adjudication process, provides some guidance on when a single FBO is permissible and when a single FBO is likely to be viewed by the FAA as an impermissible exclusive right. Whether an impermissible exclusive right exists is determined by the FAA on a case by case basis. Notwithstanding that, looking at FAA Order 5190.6B and the FAA’s published Part 16 decisions provides airport operators and tenants some guidance as to what is permissible and what is not.
The following are examples where a single FBO airport has not granted an impermissible exclusive right:
- The owner of an airport elects to provide aeronautical services exclusively using its own employees and resources. This is often referred to as a “proprietary exclusive right.” (See FAA Order 5190.6B, §8.5)
- Imposing reasonable qualifications and minimum standards in a non-discriminatory manner on those who want to engage in aeronautical services
- Denying a request to a qualified party seeking to provide FBO services where (1) it would be unreasonably costly, burdensome and impractical for more than one entity to provide FBO services; AND (2) the airport would have to reduce the leased space that is currently being used by the existing FBO in order to accommodate a second provider. See FAA Order 5190.6B, §8.7.
The following are examples of impermissible exclusive rights:
What can be done to correct an impermissible exclusive right?
If you believe that an airport having a single FBO is actually an impermissible exclusive right, what can you do to seek to correct it? The FAA has two remedies available. The remedies are to either file informal complaint pursuant to 14 CFR Part 13 or a formal complaint pursuant to 14 CFR Part 16. Before you exercise either of those remedies, however, we recommend the following: (1) verifying that you have standing to assert a claim; (2) gathering evidence to support your claim that there is an impermissible exclusive right; and (3) trying to resolve the matter with the airport sponsor.
What does it mean to have standing? Legally speaking, standing means, that you are harmed and/or have a material interest in the matter at hand. If you are trying to start up an FBO at the airport and have been denied the opportunity, you likely have standing. If you are a pilot and user of the airport and can demonstrate that the exclusive right is causing you harm you also likely have standing.
Assuming that you have standing, the next step is to gather relevant information concerning the potential exclusive rights violation. The relevant information includes: (1) the lease with the single FBO, (2) applicable minimum standards, (3) emails and correspondence between the airport and parties wanting to become an FBO at the airport, (4) the airport sponsor’s internal emails, memos and correspondence discussing the minimum standards, the potential for a second FBO, and competition at the airport; and (5) communications between the airport sponsor and the existing FBO discussing the potential for a second FBO. You can gather evidence by submitting a public records request, sometimes referred to as a freedom of information request, to the airport sponsor. Before making your request, familiarize yourself with your state’s freedom of information law and the process for submitting a request. State law generally dictates the time that the airport sponsor has to respond to the request and also what they can charge you for producing the requested materials.
Once you’ve collected the relevant materials, review them and confirm that they support your working hypothesis that there is an exclusive rights violation. Assuming that they support your hypothesis, reach out to the airport sponsor and express your concern about the impermissible exclusive rights. Send the airport manager and/or airport commission a detailed email or letter expressing your concern and request a meeting to discuss. Starting a dialogue with the airport sponsor serves several purposes. First, it is an informal way of attempting a resolution. Perhaps, when presented with the evidence, the airport sponsor will be persuaded, and the discussion leads to the airport correcting the exclusive rights violation in a manner that is agreeable to you. Second, even if you are not able to resolve the exclusive rights violation, the dialogue may generate additional relevant evidence to support your assertion that an exclusive rights violation exists. Lastly and most importantly, the FAA requires an attempt to resolve the issue with the airport sponsor before you can proceed with a Part 16 Complaint. Even if you are going to proceed with a Part 13 Informal Complaint, the FAA will still want to see that you attempted a resolution before bringing the issue to their attention.
If the exclusive rights violation continues to exist after your attempt at resolution, you may elect to bring the matter to the FAA’s attention. This can be done informally through a Part 13 Informal Complaint or formally through a Part 16 Complaint. We often recommend that a party proceed with a Part 13 Informal Complaint because they provide an opportunity for the FAA to weigh in on the matter quickly. Whereas, the Part 16 Complaint requires formal briefing and it will likely take years for the FAA to decide whether a violation exists.
The FAA does accept Part 13 Informal Complaints either orally or written. We recommend, however, that Part 13 Informal Complaints be made in writing via letter or email to the Compliance Program Manager in the FAA’s Regional Office serving the area where the airport is located. By placing your complaint in writing you have the opportunity to provide the FAA with the evidence that supports your position. Upon receipt of the Part 13 Informal Complaint, the Compliance Program Manager will acknowledge your Informal Complaint and forward it to the airport sponsor and request a statement of their position with respect to your Complaint. The FAA usually will provide the airport sponsor with at least 30 days to respond. Thereafter, the FAA will review the materials and usually tries to work with the parties to determine where the matter can be resolved through a compromise or settlement. If the FAA is unable to facilitate a resolution, they will issue a preliminary determination. If the preliminary determination finds an exclusive rights violation exists or may exist, it will request a corrective action plan from the airport sponsor.
It is important to note, the airport may develop a corrective action plan that is accepted by the FAA that does not resolve the matter in the way you envisioned. Thus, you should keep that in mind during the multiple opportunities that you have along the way to resolve the matter informally. It is usually during those opportunities that you as the aggrieved party have the greatest leverage to bring about a resolution that is most desirable to you.
Alison L. Squiccimarro is an attorney with the Law Offices of Paul A. Lange, LLC with offices in New York and Connecticut. Alison’s nationwide practice focuses on aviation related commercial litigation with an emphasis on FAA and DOT Regulatory Issues, Airports, Insurance Coverage and Employment matters. Additionally, Alison co-chair’s the American Bar Association, Forum on Air & Space Law’s Airports Committee.
