AOPA’s “siccing[1]” GAO on FAA’s FBO price regulation is futile, but its other steps will have immediate impact

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FAA UNDER SURVEILLANCE

GAO INVESTIGATING AGENCY’S OVERSIGHT OF PRICING, TRANSPARENCY, AND AIRPORT ACCESS

GAO analyzes and recommends, NOT surveils

FBO pricing involves complex economics ; FAA is a safety agency

AOPA other initiatives have immediate impact

 

AOPA’s  hyperbolic headline exaggerates the import of the GAO review of the FAA’s job ensuring airports that receive federal funding ensure businesses charge “fair, reasonable and nondiscriminatory fees and prices” for services and products. The word surveillance means “close observation, especially of a suspected spy or criminal.”

 

 

 

The GAO Mission Statement further supports its purpose in reviewing the FAA:

GAO examines the use of public funds; evaluates federal programs and activities; and provides analyses, options, recommendations, and other assistance to help the Congress make effective oversight, policy, and funding decisions. In this context, GAO works to continuously improve the economy, efficiency, and effectiveness of the federal government by conducting financial audits, program reviews and evaluations, policy analyses, legal opinions, investigations, and other services. GAO’s activities are designed to ensure the executive branch’s accountability to the Congress under the Constitution and the federal government’s accountability to the American people.

Today, GAO engages in a range of oversight, insight, and foresight activities, spanning the full breadth and scope of federal activities and programs. GAO publishes thousands of reports and other documents annually and provides a number of other related services.

The FAA’s primary focus and most of its resources are directed at aviation safety. It has accountants and economists on staff, but they do not appear to have great expertise on the pricing of FBOs and the competitive markets associated with this sector of aviation/airports. General aviation aircraft are extremely mobile assets; in making consumer decisions about buying fuel, the geographical range is regional in scope. At the same time, the costs of providing into plane fueling are substantially influenced by local forces—the cost of fuel distribution, the cost of the fuel, the lease rate charged by the airport sponsor, any additional fee collected by the airport, the labor expenses associated with this skilled work, etc.

Based on very conclusory allegations, AOPA filed a Part 13 complaint against one of the FBO sites which the association has found to have offered “egregious prices.” In response to this legal action, the

 

 

 

 

 

In a similar proceeding, the FAA found that the airport failed to offer self-service at its facility.

The FAA has no direct legal authority over the FBO; there is no certificate or approval issued by the federal safety agency for this activity. Whatever leverage the FAA has as to FBOs is found at the airport, which receives grants to build and repair runways, etc. The FAA’s de facto policy is to rely on the entity closest to the issue- the airport. The sponsor knows the local economics and actually sets some of the biggest price points for the FBOs. It is not perfect and not all authorities are vigilant in monitoring what their tenant is doing. However, it is in the Airport Sponsor’s best interest that the total income from the general aviation operations is optimized. If excessive prices are being charged, then the  returns to the airport are being harmed.

AOPA’s primary goal appears to have the GAO provide the FAA with the economic tools to examine these “egregious” prices. Such guidance, assuming that the actual application of the econometric model need not require an expansion of the agency staff, would be welcome. But perhaps the folks out in Frederick missed the Positively as AOPA awaits the GAO study, the association is taking steps which will likely have IMMEDIATE results for its members:

In its own investigations, AOPA has received more than 1,000 complaints from owners, operators, and users of the system, prompting it to release its Airport Access Watch List in April. The list included 10 airports that fit a certain profile. All 10 Watch List locations receive federal funds from the AIP, all have one FBO with a monopoly position, and all have issues with fee transparency.

After months of AOPA calling on the FBO industry to be more transparent, Signature published handling and infrastructure fees for only piston aircraft online at most of its U.S. locations. However, rates for parking, tiedowns, and security are withheld.

Other airports have taken steps to improve access, pricing, and transparency issues on their own. Casper/Natrona County International Airport in Wyoming is one of those. In July, the airport established transient ramp space for aircraft tiedowns and gave pilots clearance to access a walk-through gate to avoid paying for FBO services they don’t need or want. AOPA removed Casper from its Watch List and now calls it a “self-help” airport.

While many airports are taking steps to alleviate issues with transparency and access, there is still much work to do. AOPA considers the GAO investigation is a step in the right direction.

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AOPA is also among five aviation groups that have called on FAA Acting Administrator Dan Elwell to make the FAA require airports to map all available transient ramp space. “As we’ve said since the beginning, most FBOs do a great job of providing service to pilots at reasonable costs.

AOPA knows the regulatory process; even assuming that the FAA had the resources need to regulate FBO fuel prices, the time to be consumed to establish the economic standards (it took the CAB, with a large staff of knowledgeable economists four years to complete the

 

 

 

 

In contrast, the four initiatives mentioned in the above AOPA quotes are translating into real impacts on prices NOW.

 

 

 

 

 

 

 

 

[1] siccing

1 : chase, attack —usually used as a command especially to a dog sic ’em

2 : to incite or urge to an attack, pursuit, or harassment : set sicced their lawyers on me



 

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2 Comments on "AOPA’s “siccing[1]” GAO on FAA’s FBO price regulation is futile, but its other steps will have immediate impact"

  1. I say GAO shine a light on FBO pricing. It will serve to educate GA pilots on the free ride they’ve been given.

    FAA has spoken on the issue. FBO’s have a right to a return of their investment AND a return on their investment and should set prices accordingly to include:
    1. Capital Investment (facility & equipment)
    2. Financial commitment (risk)
    3. Ground lease rates & escalations
    4. Labor supply & prevailing wages
    5. Fuel costs (product/storage/distribution)
    6. Federal, state, & local taxes
    7. Insurance (w/sponsor as additional named insured)
    8. Safety & technical training
    Source: FAA’s Q&As – FBO Industry Consolidation and Pricing Practices

    How much does AOPA think it costs an FBO to provide 25 gal of full-service AvGas? Frankly, the only reason full-service AvGas still is available at most places is because it is written into the airport’s FBO minimum standards. They would drop it in a heartbeat if the airport would let them.

    And GA’s AvGas fuel tax contribution to the NAS? AvGas taxes contributed a whopping $23,186,847 to the Airport & Airway Trust Fund in FY 2017 yet airport development projects funded with AIP exclusively for non-primary (GA) airports totaled $950,628,000 for the same year.

    Be careful AOPA…you might not like hearing from your constituents being relegated to a remote ramp with a port-o-potty that’s been sitting out in the hot sun waiting for them and their significant other after that long cross-country flight. If it were my spouse, that would be the first and last time that ever happens. She’ll pick the next stop.

    Full disclosure: I have been an dues paying AOPA member since 1980 and own a Grumman Yankee. It can’t even take 25 gal.

    PS: AOPA, please stop using the word “egregious”. To quote Inigo Montoya: “You keep using that word. I do not think it means what you think it means.”

  2. Guvmint Pricing at Airports?
    by Ralph Hood On Oct 31, 2018
    he guvmint General Accountability Office (GAO) is now—in reaction to AOPA’s push—checking into alleged unfair pricing by FBOs for services/fuels for general aviation aircraft at airports that receive federal funding.
    Hmmm…
    Seems to me that airports should be following this very closely.
    I’m all in favor of lower prices, but, hey, how far will this go? Is it possible that the guvmint will end up setting prices for concessionaires at airports? The very idea makes me nervous.
    Frankly, I’d almost rather see prices set by the greediest profiteers than by any guvmint. The free market does have its place.
    Will the guvmint decide that I am paying too much for coffee, magazines, sandwiches, and aspirin at airports? Heaven forbid!
    Will the guvmint disapprove of car parking rates at airports? Horrors!
    Am I overreacting? Possibly.
    OTOH, there is that old belief rising in my gut—give the guvmint an inch and they will—as we say down south—go hog wild! Remember, the guvmint set a tariff on sugar way back before WW II. Last I heard, it is still in force, and we are still paying way more than the world market for sugar.
    Here’s hoping airport management will watch this like a hawk.

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