Truman Arnold Companies d/b/a TAC Air v. Chattanooga Metropolitan Airport Authority – No. 16-11-08
FAA Docket No:
FAA Docket No. 16-11-08
Author:
Randall S. Fiertz, Director, Office of Airport Compliance and Management Analysis
Complainant(s):
Truman Arnold Companies d/b/a TAC AIRRespondent(s):
Chattanooga Metropolitan Airport AuthorityAirport(s):
Lovell Field (CHA)
Holding:
Complaint dismissed.Abstract:
Complainant, the single Fixed-Base Operator (“FBO”) at CHA, asserted several allegations regarding the revision and implementation of the airport’s Minimum Standards, the selection of an allegedly nonresponsive proposer to operate a Respondent-owned FBO, the setting of fuel prices, and variety of discriminatory actions.
More specifically, the Complainant alleged that Respondent: (1) implemented unreasonable Minimum Standards when it reduced the mandatory services required of an FBO at the airport; (2) chose a nonresponsive proposer to manage the Respondent-owned FBO; (3) set prices for fuel, other goods, and deliverables and services at its Respondent-owned FBO without any consideration to the costs that a privately owned and operated FBO must bear; (4) engaged in unjust discrimination against the Complainant in favor of its own FBO; (5) attempted to gain the benefits of a proprietary exclusive without having to buy out Complainant’s interest, hire its own employees, or utilize its own equipment; (6) reduced the required services for an FBO after the RFP was closed and the management company was selected; and (7) made a request for financial assistance to the state department of transportation for design and construction that did not meet the state “Guidelines for State Funding.” (p. 4.)
In a case of first impression, the Director first considered the issue of whether the Respondent violated Grant Assurance 22(g) by entering into a management agreement with an entity (Wilson Air) to manage a “sponsor-owned” FBO but retaining the right to set fuel and other prices. The Respondent argued that the Complainant was the beneficiary of hangars, fuel farms, and large swaths of general aviation aprons that were built by the airport sponsor with public funds for which the Complainant paid only ground rent, and that the use of public funds to introduce competition where none existed before was not, in and of itself, unreasonable. (p. 22.)
Looking to the plain language of the grant assurance and its legislative history, the Director was not persuaded that the Respondent violated Grant Assurance 22(g) as “[t]he conditions in Grant Assurance 22 include compliance with airport Minimum Standards and rules and regulations, but they do not extend to details of the operation of FBO such as price setting.” (p. 28.)
The Director next considered whether the Respondent gave more favorable terms to Wilson Air and unjustly discriminated against the Complainant in favor of its owned FBO, in violation of 49 U.S.C. § 47107(a)(1), and Grant Assurance 22. The Complainant identified nine ways in which it allegedly had been unjustly discriminated against, including self-service AvGas, providing services at no or reduced costs, parking fees, signage, refusal to permit capital improvements, National Guard facility fuel farm; fuel co-op, parking, and active promotion of the sponsor-owned FBO over the Complainant. (p. 29.) However, the Director found that the Respondent-owned FBO and the Complainant were not similarly situated as they differed in size, level of investment (both public and private investment), business structure, and term of years on the airport. (p. 36.) Therefore, the Director was not persuaded by the evidence provided that any violation of federal law or Grant Assurance 22 occurred. (p. 36.)
Third, the Director considered whether the Respondent’s revision and application of its revised Minimum Standards was unreasonable and unjustly discriminatory against the Complainant. The Respondent, through an affidavit of the CEO of the Chattanooga Metropolitan Airport Authority, described the decision to remove the requirements to provide Part 145 services from its Minimum Standards, and argued that the Complainant “has the ‘contractual privilege’ of providing repair and replacement services to aircraft, but has not been contractually required to provide maintenance and repair services at the airport.” (p. 39.) The Director concluded that, “[s]ince not a single entity on the airport was meeting the maintenance and repair requirements of the original Minimum Standards at the time the RFP was issued, it was appropriate for the Respondent to review the services needed by its tenants and revise the Minimum Standards accordingly. The Director finds that the Respondent’s decision to revise it Minimum Standards to make the provision of Part 145 services options for FBOs was reasonable.” (p. 41.)
Finally, the Director considered whether the Respondent had limited the Complainant’s ability to remain in business by using public funds to build the Respondent-owned FBO and by controlling fuel and goods and services pricing, in violation of Grant Assurance 23, Exclusive Rights. The Respondent provided affidavit testimony outlining the Complainant’s publicly funded infrastructure. (p. 44.) The Director noted that, “[t]here is no grant assurance or law that prevents an airport sponsor from making the business decision to construct FBO facilities on its airport and hire a third party to operate the facility on its behalf. This holds true even if such actions cause the airport sponsor to be in direct competition with a private commercial aeronautical service provider.” (p 47.)
Accordingly, the Director was not persuaded that the Respondent’s use of public funds and retention of control over the sponsor-owned FBO’s fuel, goods, and services pricing violated Grant Assurance 23. “Respondent’s use of public funds was done within the bounds of its federal obligations. Furthermore, while the Complainant asserts that there is unfairness in the fact that the Respondent reserved the right to set fuel prices, it appears … that the Complainant has actually benefited from this arrangement. Finally, retaining pricing control as suggested by the FAA, the Respondent has ensured that it can avoid a situation in which it could be found in violation of Grant Assurance 24, Fee and Rental Structure.” (p. 51.)
That said, the Director recommended that the Respondent make necessary amendments to its lease with the Complainant to remove the right of first refusal, which, if exercised, may constitute the grant of an exclusive right in violation of Grant Assurance 23.