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FBOs Confront Competition From Airport-operated FBOs

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There is a growing trend for airport authorities to underwrite and operate FBOs in competition with other FBOs on that same airport. Airports say they need to do it for the sake of 'competition,' and FBOs say, 'compete on a level playing field.' (www.ainonline.com) さらに...

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preacher1
Pro and Con. It is unfair using public funds but there ought to be something written in the lease/contract about that type of competetition or any kind of competetition for that matter. Doesn't matter to me as when I flew our 757 and same now as new crew has 767, a lot of FBO's can't handle a plane that size and you have to use an Airline anyway. Tried not to on account of security and all but sometimes had too.
zcolescott
I think a lot of people have a skewed view on this and maybe base most of their opinions on larger airports. Airport operated FBOs are an absolute must at many smaller GA airports and are the only viable option sometimes these days. Many people seem to think that there is just endless amounts of money being made at FBOs anymore and that's just not the case. The last two airports/FBOs that I've managed only survive because their sponsoring municipalities see them as an asset to the community. I understand this article probably refers more to airports edging out privately owned FBOs at larger fields, but I've read this almost exact same article in several different publications as of late and must say that we are all being lumped into one big pot. One author even went so far as to directly discourage pilots from visiting ANY FBO that was operated by an airport saying that the don't provide the same level of service and that he bypasses them every chance he gets. That's really not fair.
mattdavis
Agreed. The discussion should really center on whether or not it is appropriate to use taxpayer dollars to compete with private enterprise.
erictuff
Keeping in mind, if the municiplaity sponsor the FBO, doesn't that make the FBO employees government employees? And if they are govenrment employees then you are placing govenrment dollars right up against private enterprise, not good. Private enterprises can innovate but the govenrment will be regulating from permits, inspections, access and overall taxiway maintenance to include plowing and mowing will there be favoritism at that time?
zcolescott
This is not always so. My airport is sponsored by a municipality, but the way the airport board was structured many many years ago, I do not report to, nor am I employed by, it (the municipality). How I wish I were a government employee with benefits and so forth! All of my decisions are based on what I feel is best for the airport, and I absolutely despise favoritism as it never ends up working out for the best.

The bottom line is that I think you will see more and more sponsors actually having to run the airport as well as pump the gas and everything else that goes along with the FBO. These types of operations are only profitable at larger style airports. Even many of the private FBOs that I see nearby to me at what I consider smaller airports still receive some kind of subsidy to stay in business. Other than that I've watched several private people start up FBOs in the recent years with the best of intentions, only to watch the fail and walk away nearly bankrupt because there just (typically) isn't enough money coming in to sustain their operation. Not only is this bad for the individual/small operator, but it leaves the sponsoring municipality in a lurch. Many of you may not like it, but it's what is happening in our industry right now to keep GA going.
LearATP
R J 0
I think you just make tac air's point for them wayne. fbos compete with each other, even if there isn't another fbo on the field. i'm not sure why you claim 'monopoly' when the customer has a choice to buy fuel somewhere else, as you just clearly demonstrated with your example.
preacher1
Obviously the fuel price difference was more than enough to justify an additional takeoff and landing. As it was pretty much due East, there wasn't any out of route to speak of. I think if you have a monopoly, like Tac Air does at Ft Smith, you need to be sensitive to the surrounding area. In the case at Chattanooga, private and public funds are not on a equal level, BUT, most of that funding is in facilitie cost and not on things like fuel. It may be, as one person noted in this string, if there are a string of complaints on a current operator, then a muni may have to do something if they can't be rectified otherwise.
jmears
Muni owned facilities don't pay property taxes like privated facilities. Also most are self insured for insurance. Try to buy insurance for an FBO each year and you will see why avgas is so expensive. This is a direct cost that makes it hard to compete.
skiss
Clearly the use of public funds is a problem- but as others are mentioning, the real issue is price gouging by some private FBOs at certain airports. Its hard to have sympathy for any FBO that charges 100LL at 2 or 3 dollars over nearby muni FBOs. Add to that those parking, ramp and special fees that go into the FBOs pockets and not to the Feds who paid for the runway and anyone can understand why some FBOs develop a reputation. Need some examples: compare KSBA to KIZA or KMMH to KBIH and dont even get me started about KSNA... The best option is simple, give the FBO a lease then offer muni run self serv with limited parking. The G5s will go to the FBOs for full serve, marble and a crapachino. The C150s go to the self serv for cheap avgas and support the local restaurants with a burger
ikold
ikold 0
Competition = cheaper fuel. I'm all for that. Just that simple.
joet
As a corporate chief pilot, I've seen fuel prices soar way above costs, mainly because of no competition. I like the amenities of course, but good grief, please, we have to account for the outrageus cost of fuel. Our Bravo averages 200 gph. On an average we pay close to $3.00 per gallon more than what we pump our own for. That's $600 per hour. We have no choice but to tanker as much as possible. We have put off upgrading airplanes and cut back on our flying because of the economy and the outrageous cost of fuel. We even divert to smaller fields because of fuel costs and ramp fees like $250 to $300, Just to walk thru the lobby. Give me a break. That's just good old American greed. I don't like the guv'ment in competetion with private enterprise, but something has to give.
ikold
ikold 0
Tinsley is right. Its very simple; more competition means greater value, means more savings, means more jobs get created, means economy grows.
When you know that the rack price is $3/gal cheaper clearly the consumer is being gouged.

J
mattdavis
Totally agree that competition is a good thing. I would question government competition though where private industry fears to tread. There might be a good market based reason why there is only 1 FBO on the field. And in the long run, wasteful government spending costs us all much more than a short term super cheap fuel price.
RRKen
Zack, I have to agree that the small town Muni owned or supported FBO is an absolute must. I cannot imagine any business with AC based in such a situation would ship off their craft to a more urban facility for service after every flight. If private enterprise could survive a small town airport, there would not be this sort of discussion.
mpradel
there's 2 sides to this story, without competition, FBOs get to charge whatever they want.

take our example: KLNA Airport, the FBO at the end of a 30 year lease charges as much as Boca Raton or PBI for avGas. All sub-leases have strict no fuel-storage or delivery restrictions.

Avgas can be had for $1 less at many airports 30-40 miles away.
mattdavis
Marcus, most well managed FBOs understand that competition for the FBO not only consists of other FBOs on the field, but other FBOs in the area, as well as FBOs at origin and destination airports. Just because there is one FBO on the field does not mean that it is not competitive.
EmeraldRocket
Good article Matt.
preacher1
Lot of good comments here. Just to back it up on the monopoly and Tac-Air cying the blues, I was at KRUE last week and watched 4 out of state Lears of various types come in for fuel on their way to everywhere from NY to FL, and no other reason to stop their other than fuel. They all had left KFSM(75miles away)about 10 minutes apart after having been there a day, all belonging to different companies. Not sure of the price difference in the fuel but it just goes to show that even corporations are sensitive to fuel prices and the smaller FBO's(this one muni owned) are glad to see the traffic.

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