There are more than 5,000 public-use airports in the U.S. that can be directly accessed by general aviation. This is more than 10 times the number of airports served by commercial airlines. General aviation airports drive the national economy and are uniquely positioned to support the public’s transportation needs.
A 2023 economic impact study analyzing the impact of general aviation on state and local economies finds the industry supports more than 1.1 million jobs and contributes more than $246 billion to the annual economy. In fact, a single business aircraft supports approximately $2.5 million in incremental economic benefit – an average of $75 for each dollar invested.
Additionally, there are more than 3,600 FBOs located at our nation’s public use airports, of which 57% are privately owned and the remaining are owned by airport sponsors. The FBO industry provides aeronautical services supporting diverse missions that range from business flights fueling the economy to lifesaving medical emergency, firefighting and humanitarian flights serving the community.
Understanding the Changing FBO Landscape
At one time, most FBOs were privately owned and operated. However, many have failed over the years due to changing economic conditions at locations that could not sustain the cost of operations. This caused airport sponsors to either find replacements or exercise a proprietary exclusive right to be the sole provider of FBO services. Traditionally, these FBOs have been small operations that offer only fuel or minimal aeronautical services in markets unlikely to attract a private FBO.
The latest Airport Cooperative Research Program (ACRP) study on the landscape of the FBO industry shows that, in 2022, the FBO industry remained large and diverse, reflecting a broad array of general aviation users, private companies and public entities that support aircraft and customers.
It also points to major shifts in the FBO landscape regarding how air travel was consumed during COVID-19. At that time, there was a tight used aircraft market, growth of public charter operators selling seats on private aircraft, and expansions into destination markets in favor of business centers. This shift in private aviation followed the shift from urban to more remote living.
Over the past several years, the FBO industry also has experienced the consolidation of FBO operators and the use of private equity to finance high-valuation mergers and acquisitions. These investments rely more heavily on real estate ventures than on traditional FBO services such as fueling, line services and concierge services.
In order to remain competitive, a growing number of U.S. FBOs that used to rely on a bundled approach to FBO operations are enabling price-conscious customers to select from a menu of services. At the same time, FBOs in some markets are implementing dynamic pricing at locations with high demand, much like other service industry providers. As airports adopt this model to maximize investment and revenues, they are creating additional cost pressures that ultimately impact end users.
Clearly, continued change is coming to the FBO industry from many directions, while the challenges of diminishing fuel margins, hangar shortages, equitable rates and charges, and the availability of capital for modernization projects remain at the forefront. In this environment, many airport sponsors are exercising their proprietary exclusive right to provide aeronautical services.
This raises two central questions: In the changing landscape, is this trend consistent with the intentions of FAA provisions for exclusive rights? Is it healthy for an airport to operate its FBO?
Exercising Proprietary Exclusive Rights
Per Advisory Circular AC 150/5190-5, the FAA intends to promote fair competition at federally-obligated, public use airports for the benefit of aeronautical users. Generally, the existence of an exclusive right at an airport is considered to limit the usefulness of the airport and deprive the public of the benefits that flow from competition.
An exception to this general rule is that an airport sponsor may elect to provide any or all aeronautical services to the public. The FAA’s only condition is that the airport sponsor use its own employees and resources to provide aeronautical services.
Notably, 83% of public-use airports in the U.S. are owned by cities, towns and counties that must comply with federal requirements to maintain financial self-sustainability. It is critical they observe all federal and state grant assurances that guide what they may do with and on airport property. They must also make the airport reasonably available for public use without discrimination.
While most airport sponsors recognize that aeronautical services are best provided by profit-driven private enterprises, there are situations where an airport opts to perform the aeronautical activity itself in order to become financially self-sustaining. In all cases, the airport must promote fair and transparent competition for the benefit of all aeronautical users.
An airport’s economic health depends on its commitment to using an equitable, competitive and transparent selection process to attract tenants willing to make capital investment and offer quality services at reasonable prices. However, when an airport opts to operate an FBO, it poses the risk of eliminating competition, deteriorating the competitive FBO model and negatively impacting end users by creating a public monopoly.
For example, Richmond International Airport recently cancelled two bid processes for FBO services that were previously delivered successfully by two long-term tenants. While the local airport authority requested multiple proposals from the private sector and seemingly found proposers to be fully qualified, it subsequently cancelled those requests for proposals.
Preserving a Level Playing Field
Creating a public monopoly and eliminating a level-playing field will negatively impact the health of the airport and regional economy. As private investment dollars dwindle, more government funding will be needed to ensure the delivery of quality aeronautical services. And, funds once dedicated to improving airport safety, security and capacity will be diverted to support government-operated businesses that are unable to operate as efficiently or nimbly as profit-motivated private enterprises.
As supported by the long-term policy of the National Air Transportation Association, which is taking great interest in this issue, private businesses should be the first option to provide safe, high-quality services at our nation’s airports. These aeronautical tenants fuel job creation and provide private sector capital to fund the development of critical facilities and airport infrastructure, relieving airports from seeking public funds.
Today, a growing number of general aviation airports face demands to impose voluntary curfews, as well as access and land use restrictions, as a method to restrict operations. Many of these measures are being fueled by elected leaders, despite the fact they may put an airport’s grant assurances in jeopardy.
Looking ahead, FBO takeovers in the public sector will likely continue, as will merger and acquisition activity. The general aviation industry is investing heavily in growth areas such as technology, sustainable aviation fuel and advanced air mobility. These have the potential to open new air transportation opportunities, move people and goods more efficiently, fuel economic growth and help reduce environmental impacts.
But, for progress to happen, FBOs must be removed from traditional government structures, processes and pressures that put aviation jobs and businesses at risk in the interest of political gain. Better management produces better outcomes.
