As a fellow aviation business owner, like you, I understand our industry is a vast and interrelated eco-system. It’s critical that we not limit our relationships solely to our customers but also to cultivate a wider range of relationships that includes the airport, local government and the community as a whole. First and foremost, the success of our businesses relies on a prosperous and healthy airport. So we are using this edition of Aviation Business Journal to highlight the importance of the relationship between our businesses, our airports and the communities they serve.
Since taking the helm of NATA last fall, I have had the opportunity to interact with the leadership of the nation’s aviation associations. Two of the relationships I have come to value and enjoy most are with the heads of the leading organizations that represent airports, Kevin Burke, President of Airports Council International-North America and Todd Hauptli, President of the American Association of Airport Executives.
All three of us recognize that while tenants and landlords will always be involved in business negotiations, more issues unite us than divide us. By sharing perspectives on issues confronting our firms and airports, we can strengthen the overall airport-tenant relationship and identify matters we can address together. I am delighted that Kevin and Todd feel so strongly about their relationship with NATA that they agreed to share their perspectives in this edition of ABJ. As you will see in Todd’s column, NATA partnered with AAAE to create an airport-tenant working group to foster this important communication process.
In the current political and economic climate, our airport partners have challenges. If left unaddressed, these problems will directly impact our businesses. Of course, the biggest is funding. Federal airport funding remains flat, and though larger airports have the ability to secure additional money through Passenger Facility Charges (PFCs), those dollars now equate to half the spending power since last adjusted in 2007.
The latest survey of capital needs from Kevin’s organization indicates airport needs over the next five years are three times the amount airports can currently expect to receive from Airport Improvement Program grants and PFC revenues. This capital challenge is real at many of the general aviation and non-primary airports at which we operate, where airports are limited to $150,000 in entitlement funding per year. Solutions include more than just a commitment to increasing funding, but a review of FAA regulations that can increase the costs of airport projects and extend the timelines for completion.
On the opposite side of the coin, airports are seeing the evolution in our businesses. As leases come up for renewal, many communities are seeking greater levels of investment in order to create high-end gateway facilities to their communities. The increasing efficiency of aircraft also impacts our business models. An FBO’s primary competitor may no longer be a competing operation on the same airport, but rather another airport nearby, or the airport where the plane came from or at its final destination. The retreat of the airlines from many communities, 50 alone in the past couple of years, has created opportunities for our Part 135 and Part 91k members to restore important connectivity for these areas to the rest of our nation. Other changes in our industry that airports carefully monitor include the changing nature of the piston-powered community, FBO consolidation, nascent customer networks and the increasing number of airport-operated FBOs.
I hope you have the opportunity to review our feature story this issue, highlighting the work of the Aeroplex/Aerolease Group, which creates success through an emphasis on collaboration with other tenants, the airport and the community for the benefit of all.
After all, we’re in it together.
Republished from the 2017 Q1 Aviation Business Journal.