AOPA complains about Signature’s pricing model at 3 airports— can/should FAA resolve?

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AOPA v. Signature Aviation

Informal Part 13 Complaint Against AVL, EYW & UGN

An epic battle has been declared. On behalf of its about 400,000 members AOPA has filed a Part 13 informal complaint against three airports (Asheville Regional Airport [AVL]; Waukegan National Airport [UGN]; Key West Int’l Airport [EYW]) alleging that the sponsors of those three facilities have failed to “guard against potential monopolistic behavior at airports and prohibit, through grant assurances, the unreasonable and discriminatory pricing for aeronautical facilities and services.” Actually, the target is Signature Aviation, which coincidentally owns the sole FBO at each of the airfields at issue and which AOPA avers that the company “controls all the ramp space available for transient operators to park, is the only fuel provider, and thus possesses a monopoly position and significant power over access to a public AIRPORT.”

aopa informal part 13 complaint key west international airport

AOPA v. Informal Part 13 Complaint Against Key West International Airport

AOPA, in recognition that an FBO is not, has not been(?), the subject of a similar complaint, initiated these actions against three airport sponsors. Even more significantly, the “defendant” is not Signature because the statute/assurances do not directly apply to this tenant. Thus, the GA association asks that the FAA airports division[i] investigate Signature’s pricing practices and take the necessary action to ensure that Signature’s aeronautical fees are reasonable and the [sponsor] complies with its grant obligations.”

Therein lies the rub. Unless the lease between these sponsors and Signature creates an authority to examine the FBO’s accounts and books, it will be difficult for either the airport or the FAA to access the data needed to prove that the pricing practices are “unreasonable.” Without direct evidence that Signature’s pricing model is unreasonable (presumably with revenues well in excess of costs), it would be hard for the FAA to make the determinations sought by AOPA.

Perhaps to cure that deficiency, the Frederick, MD advocates have produced substantial data on the Signature rates and charges as opposed to proximate FBOs (query: if the locations are sufficiently close to constitute the “same market”, do such alternatives constitute the requisite competition and defeat a “monopoly” claim?). The prices may not be adequate to prove an excessive charge.

aopa part 13 informal complaint waukegan national airport

AOPA v. Informal Part 13 Complaint Against Waukegan National Airport

Forensic accounts would have to demonstrate by a preponderance of the evidence, that FBO pricing model at each specific location may be driven by (justified), for example:

  • ground lease charges including factors like the airport receiving a percentage of the gross
  • insurance premiums for handling high value aircraft
  • cost of delivering fuel to a remote location (like EYW)
  • requirement to have MX and fueling services 24/7/365 despite few night flights and/or substantial seasonal variations
  • high labor cost
  • substantial overhead expenses
  • reserves for extreme weather
  • infrastructure requirements from the sponsor
  • environmental protection capital and operating expenses

The exact costs for each of these categories would be difficult to estimate and would compel the FAA to hire an independent expert.

Assuming that a prima facie case could be made, how can the FAA compel compliance? Impose civil penalties against the Sponsor? Diminish the sponsor’s AIP priorities for discretionary funds?

aopa part 13 informal complaint asheville regional airport

AOPA v. Informal Part 13 Complaint Against Asheville Regional Airport

To reach the solution which AOPA seeks, each sponsor might have to sue Signature to adjust their fees; to which the FBO might reply “cite me the section of our lease, of your assurances or of the Act which compels me to charge a reasonable price”? Even more tellingly, the retort to a complaint might be “what price is reasonable now? 6 months from now? and beyond?”

If the FAA engages in the Part 13 process at AVL, EYW and UGN, is that a signal that the secondary prices at airports are subject to its jurisdiction. It took substantial efforts to establish Policy Regarding Airport Rates and Charges, 78 FR 55330; applying that policy to FBOs would require substantial staff. That document expressed the preferred resolution:

It is the fundamental position of the Department that the issue of rates and charges is best addressed at the local level by agreement between users and airports.

The Airline Deregulation Act of 1978 is fast approaching its 3rd decade. Perhaps, the underlying policy basis for striking the CAB’s “fates and fares” powers was the Fred Kahn mantra that bureaucrats faced an impossible task in trying, on a real time basis, to regulate prices (n.b. some of the fares were charged in one competitor markets)!

AOPA makes a compelling equity argument that the rates at AVL, EYW and UGN are high. It not clear that the FAA has the resources, the technical competence, the time or a strong enough policy basis to make the legal determinations requested by AOPA.

 


[i] Illinois Aviation Department which distributes block fund grants for UVN

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