Author:
O’Donnell, Michael J., Director
Complainant(s):
41 North 73 West Inc. d/b/a Avitat Westchester|Jet Systems
Respondent(s):
Westchester County (N.Y.)
Airport(s):
Westchester County (N.Y.) Airport (HPN)
History:
Affirmed by Final Decision and Order of Sept. 18, 2009. See Determination No. 208.
Holding:
Dismissing complaint.
Abstract:
Complainant, 41 North 73 West, Inc., d/b/a Avitat Westchester and Jet Systems, operated at the Westchester County Airport as one of three larger-class FBOs serving corporate and commercial turbo-jet aircraft up to 120,000 lbs. gross take-off weight. The Airport also had another class of FBOs that served smaller, private general aviation aircraft. Complainant alleged that Respondent, Westchester County, New York, gave the smaller-class FBOs preferential financial treatment in violation of Grant Assurances 22, 23 and 24.|Grant Assurance 22 – Unjust Discrimination:|Complainant alleged that it was similarly situated to the smaller-class FBOs and that, therefore, the differences in the lease terms and rental rates were unjustly discriminatory. The Director found that Complainant was not similarly situated to the smaller-class FBOs because the smaller-class FBOs in question had signed their lease six years before Complainant and Complainant was not subject to the same use restrictions and requirements as the smaller FBOs, which included among other things limitations on aircraft weight and the requirement to offer particular services. (pp.22-23).|Because Complainant had negotiated its own lease with the Respondent and there was no indication that it “objected to the terms of the lease or was denied access to pertinent information during the negotiations,” the Director concluded there|Complainant, 41 North 73 West, Inc., d/b/a Avitat Westchester and Jet Systems, operated at the Westchester County Airport as one of three larger-class FBOs serving corporate and commercial turbo-jet aircraft up to 120,000 lbs. gross take-off weight. The Airport also had another class of FBOs that served smaller, private general aviation aircraft. Complainant alleged that Respondent, Westchester County, New York, gave the smaller-class FBOs preferential financial treatment in violation of Grant Assurances 22, 23 and 24.|Grant Assurance 22 – Unjust Discrimination:|Complainant alleged that it was similarly situated to the smaller-class FBOs and that, therefore, the differences in the lease terms and rental rates were unjustly discriminatory. The Director found that Complainant was not similarly situated to the smaller-class FBOs because the smaller-class FBOs in question had signed their lease six years before Complainant and Complainant was not subject to the same use restrictions and requirements as the smaller FBOs, which included among other things limitations on aircraft weight and the requirement to offer particular services. . (pp.22-23).|Because Complainant had negotiated its own lease with the Respondent and there was no indication that it “objected to the terms of the lease or was denied access to pertinent information during the negotiations,” the Director concluded there was no unjust discrimination even if the impact of the lease arrangement was less than desirable for Complainant. “[N]o grant assurance protects an aeronautical service provider from more effective competition.” (pp. 25, 30).|“It is probable that negotiations between an airport sponsor and different airport users, over varying periods of time, with differing business strategies will not likely result in the same lease terms and rates.” (p. 25).|“The FAA will not entertain a complaint about the reasonableness of a fee set by agreement when filed by a party to the agreement.” It is longstanding FAA policy that “rent and lease discrimination cannot be unjust if the complaining party agreed to differing rights, restrictions and responsibilities in negotiations.” (pp. 25-27).|“The grant assurances do not protect aeronautical service providers from the consequences of anticipated or un-anticipated competition or lack of due-diligence.” (p. 27).|In addition, Complainant was found to be dissimilarly situated from other smaller-class FBOs because it had not requested similar treatment as those FBOs from Respondent, had not sought access to additional aeronautical business, and had only sought a limitation on the existing aeronautical businesses of the smaller-class FBOS whose agreement existed before Complainant’s current agreement. (p. 30).|Complainant’s allegation that even if it was not similarly situated to other users, the lease differences must have been equitable was denied because Complainant had accepted the differences in rights, restrictions, and responsibilities when it negotiated its lease. “The fact that these differences have turned out less advantageous than [Complainant] hoped is not unjustly discriminatory, nor does it make the agreed-to differences inequitable.” (p. 28).|Grant Assurance 22 – Preferential Treatment:|Complainant alleged that the inclusion of a “voluntary restraint from flying” clause in its lease has a discriminatory impact because not all FBO leases include the same clause. The Director denied this claim Complainant did not provide any evidence that Respondent had enforced that provision, and the FAA judged compliance on “an airport sponsor’s actions, not the verbiage of leases or rules.” (p. 31).|The Director also denied Complainant’s allegation that language from an RFP issued over ten years ago was discriminatory because it stated that the successful bidder would not be allowed to sell jet fuel (which Complainant does). “RFPs are not controlling documents, under the grant assurances. The FAA does not enforce past policies, practices or interests of airport management, as expressed in an RFP. RFPs are solicitations to interested parties to conduct a business on an airport. The FAA expects airport sponsors to change and evolve to address the best interests of the aeronautical public.” (p. 32).|Further, a sponsor may exclude an incumbent FBO from responding to an RFP to “‘add further competition to the airport and to provide more choice and services for the public user.’” (citing Corporate Jets v. City of Scottsdale, Docket No, 16-01-12 Director’s Determination at 10 (2002)). And “due to time elapsing, the FAA [was] unable to determine, ten years later, that the RFP process . . . was based on any unreasonable or discriminatory premise.” (p. 31).|Grant Assurance 22 – Unreasonableness:|The allegation that Respondent imposed unreasonable terms of use upon Complainant was denied because Complainant “agreed to accept a certain set of rights and responsibilities in exchange for certain rents and restrictions. It [wa]s not unreasonable for the [Respondent] to allow tenants to compete according to the terms of agreements previously agreed to.” (p. 36).|Grant Assurance 23 – Constructive Exclusive Right:|Complainant’s allegation that allowing the smaller-class FBOs to compete with the larger-class FBOs created a constructive exclusive right was denied because Complainant had agreed to a “wholly different set of rights, restrictions, responsibilities, and rents in [its] 2005 [] Lease while the [smaller-class FBO] Leases had existed for years prior to 2005 [and] had not changed since 2001.” (p. 37).|Grant Assurance 24:|Complainant’s allegation that Respondent violated Grant Assurance 24 was denied because it concerned specific rights, restrictions, and responsibilities and not “the simple occupancy of airport property” (e.g. comparative square footage rents, an airport-wide fuel flowage fee, etc.). Even if the rent for the smaller-class FBOs was below market rental rates, “long-standing FAA precedent d[id] not require market rates for aeronautical use of property as a condition of complying with Grant Assurance 24.” (pp. 37-38).
Index Terms:
Constructive exclusive right|Economic Nondiscrimination (Grant Assurance 22)|Exclusive Rights (Grant Assurance 23)|Fee and Rental Structure (Grant Assurance 24)|Fuel Sale|Preferential treatment|Request for Proposal (RFP)|Similarly situated|Unjust economic discrimination