Author:
Bennett, David L., Director
Complainant(s):
Adventure Aviation
Respondent(s):
Las Cruces (N.M.)
Airport(s):
Las Cruces International Airport (LRU)
History:
Affirmed by Final Decision and Order of Sept. 9, 2003. See Determination No. 116.
Holding:
Dismissing complaint.
Abstract:
Complainant Adventure Aviation, an FBO, filed a complaint against Respondent, City of Las Cruces, New Mexico, sponsor of Las Cruces International Airport, alleging that Respondent violated Grant Assurances 19, 22, 23 and 24 through preferential treatment of one FBO over another. Incumbent FBO had a lease pre-dating adoption of the Airport's Minimum Standards that provided for ground rent, percentages of gross income, and fuel flowage fees. Complainant entered into a lease following Respondent's adoption of Minimum Standards that required payment of ground and facilities rents, percentages of some fees, but no fuel flowage fees. Incumbent had obligation to maintain buildings and pay utilities; Complainant did not. The Director found Respondent not in violation of the Grant Assurances and dismissed the Complaint.|Unjust Discrimination (Grant Assurance 22):|"The issue of rates and charges is best addressed at the local level by agreement between users and airports." (p. 12)|Since Complainant entered into its lease with full knowledge of the terms of its competitor's lease, it could not use Grant Assurance 22 to protest the provisions of its lease. (p. 13).|"Long-standing FAA policy and precedent that has withstood judicial challenge establish that Assurance 22(c) does not require that airport sponsors charge all FBOs identical lease rates." (p. 12). Differences in lease terms may be justified by the market conditions present at the time of lease execution, and by differences in space, location, or facilities. (p. 13) Moreover, a Sponsor may increase its standards from time to time in order to ensure a higher quality of service to the public. (p. 13).|Differing timeframes can result in differing lease rates and lease terms. "Federal obligations do not require a sponsor to equalize the risk environment between the FBOs entering into business at different times, by perpetuating lease rates based on different market circumstances." (p. 17).|Complainant failed to demonstrate unreasonableness of the difference in lease terms. Complainant agreed, without objection, to terms that differ significantly from those that its competitor accepted four-and-a-half years earlier, many of which conferred a competitive advantage on Complainant. (p. 14) This made a difference in rates and charges reasonable and equitable.|Complainant's competitor's underpayment of rent was not evidence of unjust discrimination, because "the standard for an airport sponsor's noncompliance with its Federal obligations is not the simple fact of a tenant's noncompliance with its lease terms." (p. 19).|Adequate Operation and Maintenance of Facilities (Grant Assurance 19):|Respondent did not violate Grant Assurance 19 by not taking corrective measures or other actions with respect to Complainant's competitor's multiple and ongoing safety infractions, because "incidental violation of airport rules by tenants is not sufficient to create the presumption of unjust discrimination or failure to maintain." Moreover, where the Sponsor has minimum standards, design standards, lease terms, and has taken legal action and other steps to enforce its terms and standards, evidence of infractions will be insufficient. (p. 23).|Self-Sustainability (Grant Assurance 24):| The below-market rate charged to Complainant's competitor was not in violation of Grant Assurance 24. "FAA's long-standing interpretation of self-sustainability is that there is no requirement to charge aeronautical service providers market rates." (p. 24)|Exclusive Rights (Grant Assurance 23):|Courts have found the grant of an exclusive right where a significant burden has been placed on one competitor that is not placed on another. However, in this case, FAA was not persuaded this has happened, for reasons discussed above. (p. 24).
Index Terms:
Economic Nondiscrimination (Grant Assurance 22)|Operation and Maintenance (Grant Assurance 19)|Exclusive Rights (Grant Assurance 23)|Fee and Rental Structure (Grant Assurance 24)|Minimum Standards|Fixed-base operator (FBO) agreement|Isolated incident|Self-sustainability