The Ripple of Competition (1978) reaches FBOs and the industry provides guidance

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Aviation Associations recommend fee transparency, flexibility and speed for best business practices

1978 competition ripple hits FBOs

Six Aviation Associations develop guideline

Good 1st Step, more?

In 1978, the Congress dropped “economic competition” in the theretofore highly regulated, calm pond of aviation. Deregulation unleashed a ripple of competition and the airlines explored new pricing, expanded routes and all of the ancillary aspects of attracting passengers. Mergers and bankruptcies were measures of that ripples impact on these private companies. Even airports felt the impact of this powerful force—demand exceeding capacity; slot controls, reduction of the majority-in-interest clauses, hubbing schedules, FAA policy statements on costs and use of revenues, etc. The ripple also reached international air transportation via “Open Skies.”

The rolling of the ripple through segments of aviation has moved forward with a minimum of federal regulation and no ratemaking. The 1978 Act policy pronounced that market forces should be relied upon and the trace of this expanding concentric circle has moved without much help from Washington.

It has taken a while the undulation of competition to reach the periphery of aviation’s pond—fixed based operators. These economic actors are in the center of general aviation flying- every airport needs one or more FBOs to handle the needs of these aircraft. The business segment must deal with many of the challenges which aviation faces on a macro level—fluctuating fuel prices, hiring and retaining the talent pool needed to fuel and handle these complex machines, environmental requirements, technology developments and competition. The decision of whether one or more FBOs will be allowed at an airport is the exclusive power of the sponsor.

The ripple of the Deregulation impact on FBOs has become visible and the point of some internecine debate within the general Aviation community. The FAA has been drawn, uncomfortably, into this controversy. Here are some posts on this disagreement:

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

Benjamin Franklin on the FBO Pricing and Transparency Revolt

FAA’s FBO regulatory guidance well-constructed, unlikely to resolve conflicts

Jackson Hole & its Eye of the Needle 2nd FBO case

Fuel & FBO Fees are Nemeses to AOPA & aviation in general

Orange County FBO award battle

Chattanooga can Choose to Compete with its FBO, but wouldn’t an RFP for a 2nd Facility be Preferable?

Key West is not Kokomo

FAA’s Southern Region DENIES AOPA’s complaint against the GRAA- teachable moment?

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

FAA regulates Airport Economics & Safety; Compliance is tricky

Those, who are involved in the intricacies of the FBO, collectively have set down some general principles which hopefully will improve the information available from FBOs to their customers. The council drawn together for this guidance includes the General Aviation Manufacturers Association (GAMA), the Aircraft Owners and Pilots Association, the Experimental Aircraft Association, the Helicopter Association International, the National Air Transportation Association and the National Business Aviation Association. These six organizations represent both sides of these transactions and can speak for the full range of users.

They describe the “Know Before You Go” information as follows:

 

The associations recognize, however, that not all FBOs will have the same capabilities. While pushing for speed, they note that some FBOs may require more flexibility and time to follow these requests or provide reasonable alternatives. That said, they ask that FBOs invite and encourage customers to contact them before visiting, so informed decisions can still be made.

“Know Before You Go”

The six associations should be commended; by taking what appears to be a first step in providing guidance to the FBO-customer transaction, they have diminished the need for the FAA or the GAO to attempt to establish whatever standards which they may deem appropriate. Hopefully, this coalition will add to the dimensions of the best business practices.



 

 

 

 

 

 

 

 

 

 

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