Atlantic Beechcraft Svcs., Inc. and Southeast Turbine Corp. v. City of Fort Lauderdale — No. 16-17-03
Final Agency Decision (12/10/2020)
FAA Docket No:
FAA Docket No. 16-17-03
Author:
D. Kirk Shaffer, Associate Administrator for Airports
Complainant(s):
Atlantic Beechcraft Services, Inc., Southeast Turbine Corp.Respondent(s):
City of Fort Lauderdale, FloridaAirport(s):
Fort Lauderdale Executive Airport (FXE)
History:
Complaint dismissed (affirmed on appeal).
Holding:
Complaint dismissed (affirmed on appeal).Abstract:
Atlantic Beechcraft Services, Inc. (“Atlantic”), a certified maintenance facility, leased space for its business from Sheltair at Fort Lauderdale Executive Airport (“FXE”). The initial sublease permitted Atlantic to perform “aircraft interior completions,” which encompassed work on both turbine- and piston-engine powered aircraft. Sheltair also leased a portion of its leasehold to Banyan Air Services to operate as a full-service fixed-base operator (“FBO”) and to be the exclusive provider of certain FBO services, including the maintenances and repair of turbine engines within Sheltair’s leasehold. In 2015, Atlantic and Sheltair executed a second amendment to the hangar lease agreement that prohibited Atlantic from working on turbine-powered aircraft on that particular leasehold, i.e., “Tenant shall occupy the premises for aircraft storage and piston maintenance only.” Atlantic’s owner averred that Sheltair was monitoring his business to preclude maintenance on turbine aircraft to reduce competition to Banyan.Atlantic ultimately filed a formal complaint against the City of Fort Lauderdale pursuant to 14 C.F.R. Part 16, contending that the city, as sponsor of the airport, had allowed Sheltair to grant an exclusive right to Banyan, its subtenant, and therefore was itself in violation of Grant Assurance 23. (Director’s Determination, p. 13.) The Director disagreed, concluding that “it is clear that the issue is really a disagreement with the terms of the most current lease between Atlantic and Sheltair. Atlantic may be dissatisfied with the lease that it signed with Sheltair.” (Director’s Determination, p. 13.) Moreover, the Director noted that “[i]t is paramount that the parties to this complaint understand that the FAA does not arbitrate or mediate negotiations through a formal Part 16 complaint process. Nor does the FAA enforce lease terms between parties to an agreement. Rather, the FAA enforces contracts between an airport sponsor and the Federal government.” (Director’s Determination, p. 12.) The Director also determined that the City offered Atlantic other reasonable locations at FXE to lease, but that Atlantic refused to accept these other locations. “The Director also determined that other commercial aeronautical service providers conducted the same services that Atlantic offered at the airport.” (Final Agency Decision, p. 2.)
In this context, the Director concluded that, “the simple fact is that Atlantic did agree to terms in the lease amendment that only allowed storage of Tenant’s aircraft and aircraft interior completions does not equate to a violation of Grant Assurance 23 … the Director is not persuaded that the City has permitted Sheltair to engage in a prohibited exclusive right in its sublease agreement with Atlantic.” The Director continued: “There is insufficient evidence in the present record that the City has made it impossible for Atlantic or other aeronautical service providers to start or do business at the airport.” In fact, the Director noted Atlantic’s concession that “… the City did not (apparently) participate in the scheme between Sheltair and Banyan to effectively give Banyan an exclusive right to perform maintenance on turbine engines.” (Director’s Determination, p. 12.)
The Complainant appealed on the basis that the Director’s findings and conclusions should be set aside and that “his decision is not in accordance with law and FAA’s precedent and policy.” (Final Agency Decision, p. 1.) More specifically, the Complainant argued that the Director improperly framed the issue as “not whether Sheltair granted Banyan an [improper] exclusive right, ‘but whether the parties agreed to the alleged exclusivity provision in their lease.’” (Final Agency Decision, p. 6.) The Associate Administrator disagreed, however, ruling that “Atlantic had other opportunities to conduct the work it desired to do at other locations on the airport and other airport tenants were in fact doing so. Applying the exclusive rights to an individual tenancy without taking an airport-wide perspective makes no sense and violates the clear text of the assurance.” (Final Agency Decision, p. 8.) Thus, “[w]e agree with the City’s argument that nothing required Sheltair to sublease its space to other service providers at all. Sheltair could have itself provided all or any FBO services within its leasehold, including turbine-engine maintenance and repair.” (Final Agency Decision, p. 8.)