UNITED STATES DEPARTMENT OF TRANSPORTATION

FEDERAL AVIATION ADMINISTRATION WASHINGTON, D.C.

Docket No. 16-08-02

FINAL October 1, 2009 Asheville Jet, Inc. d/b/a Million Air Asheville

COMPLAINANT

v.

Asheville Regional Airport Authority; City of Asheville, North Carolina; and Buncombe County

RESPONDENTS

DIRECTOR’S DETERMINATION

I. INTRODUCTION

This matter is before the Federal Aviation Administration (FAA), Director of the Office of Airport Compliance and Field Operations 1 to investigate pursua nt to the Rules of Practices for Federally Assisted Airport Enforcement Proceedings found in Title 14 Code of Federal Regulations (CFR), Part 16.

Asheville Jet, Inc. 2 d/b/a Million Air Asheville (Compl ainant) filed a formal Complaint pursuant to 14 CFR Part 16 against the As heville Regional Airport Authority and sponsors the City of Asheville and the County of Buncombe (Respondents) alleging discriminatory actions in vi olation of grant assurance 5, Preserving Rights and Powers ; grant assurance 22, Economic Nondiscrimination ; grant assurance 23, Exclusive Rights ; and grant assurance 27, Use by Government Aircraft

, 3 including:

A. Subleasing Airport property on which fede ral funds were expended and that had previously been available to users of all types, kinds, and classes, to a competitor for the competitor’s exclusive use. [ See FAA Exhibit 1, Item 3, page 2.]

1 This office was formerly part of the Office of Safe ty and Standards; the Offi ce of Airport Compliance and

Field Operations is now a separate directorate resp onsible for adjudicating Part 16 formal complaints, among other matters.

2 Throughout the record documents, Complainant’s business name is spelled both “Asheville Jet” and

“Ashville Jet.” In this determination, we have used “Asheville Jet,” which is the initial spelling provided by Complainant’s counsel in the Complaint document.

3 See FAA Exhibit 1, Item 3, page 2.B. Permitting a competitor to operate without complying with the Airport minimum standards. [ See FAA Exhibit 1, Item 3, page 2.]

C. Providing substantially more favorable subl ease terms to a competitor than to the Complainant. [ See FAA Exhibit 1, Item 3, page 2.]

With respect to the allegations presente d in this Complaint, under the specific circumstances at the Airport as discussed be low and based on the evid ence of record in this proceeding, the FAA finds that the Responden ts are not currently in violation of their federal obligations.

The basis for the Director’s c onclusion is set forth herein.

II. PARTIES

A. Airport

The Asheville Regional Airpor t (Airport or AVL) is a public -use airport owned by the City of Asheville (City) and operated by the Asheville Region al Airport Authority, a joint governmental agency created by the City and B uncombe County pursuant to Article 20 of Chapter 160A of the General Statutes of Nort h Carolina. The Airpor t Authority controls and operates the Airport pursuan t to a lease between the City and Airport Authority dated July 1, 1980. Through an amendment to the Ai rport Authority’s lease with the City, the Airport Authority’s lease term inates on April 30, 2018. As su ch, the City requires that the City Council approve any subleases that extend beyond April 30, 2018. [FAA Exhibit 1, Item 3, page 3.]

The Airport has 8 helicopters and 122 base d aircraft with 35,374 operations annually, including more than 1,000 military operations. [FAA Exhibit 1, Item 1.] Since 1983, the Airport has received entitlement and discre tionary Airport Improvement Program (AIP) grants totaling more than $39 m illion. [FAA Exhibit 1, Item 2.]

B. Complainant

Complainant, Asheville Jet Center , is a fixed-base operator (FBO) 4 located at Asheville Regional Airport (AVL). Complainant holds a long-term sublease on the Airport for its facilities. Complainant executed a 24-y ear sublease effective January 1, 1993 [ see FAA Exhibit 1, Item 5, attachment 3]; and subse quently executed two management agreements effective September 13, 2004, for the construction and development of a Bulk Hangar Facility and a T-Hangar Facility [ see FAA Exhibit 1, Item 5, attachments 5 and 6].

Asheville Jet states it has been in business at the Airport with its current owners or prior owners for over 25 years. [FAA Exhibit 1, Item 12, page 12.] Until the Airport entered

4 A fixed-base operator (FBO) is a commercial entity providing aeronautical service such as fueling,

maintenance, storage, ground and flight instruc tion, etc., to the public. [FAA Order 5190.6A, Airport Compliance Requirements , October 2, 19889, Appendix 5.]

Page 2into an agreement with Encore Acquisitions LLC – a competing fixed-base operator – in November 2007, Asheville Jet was the only fixed-base operator at the Airport.

III. BACKGROUND and PROCEDURAL HISTORY

The City of Asheville owns the land on which Asheville Regional Airport (AVL) is located. The City leases the land to the Ai rport Authority, which ope rates the Airport. The Airport Authority is a govern mental entity. Its lease w ith the City is in effect through April 30, 2018. [FAA Exhibit 1, Item 6, page 1,]

Effective January 1, 1993, Complainant Ashevi lle Jet executed a 24-year sublease with the Airport Authority. [FAA Exhibit 1, Item 5, attachment 3.] In 2003, Asheville Jet (which had originally been an independent company) became part of the Million Air chain. [FAA Exhibit 1, Item 6, page 1.]

Beginning in 2004, the Respondents made an ef fort to attract a second fixed-base operator, believing the Airport could sustai n two fixed-base oper ators and that the competition would benefit the aeronautical user s of the Airport. [FAA Exhibit 1, Item 6, page 2.]

Effective September 13, 2004, Complainant executed two management agreements for the management of a bulk hangar facility and a t-hangar facility. Both management agreements were for a five-year term with two five-year options. The Authority constructed both the bulk hanga r facility and the t-hangar facility, which Asheville Jet now manages. [ See FAA Exhibit 1, Item 5, exhibit 5, pages C-1 and D-1; and Item 5, exhibit 6, pages C-1 and D-1.]

On July 9, 2007, competitor Encore Acquisiti ons, LLC (Encore) pr ovided the Airport Authority with a commitment letter indicating its interest in cons tructing a new fixedbase operator facility at the Airport. [FAA Exhibit 1, Item 3, page 4. See also Item 5, exhibit 8, July 9, 2007 letter.]

Effective November 9, 2007, the Respondents and Encore entered into a 30-year sublease agreement with a ten-year option. [ See FAA Exhibit 1, Item 6, page 2; and Item 5, attachment 10.] The agreement requires Encore to invest $3.5 million in facilities at the Airport by March 31, 2009. 5 [FAA Exhibit 1, Item 6, page 9.] The agreement also grants a temporary waiver from certain mi nimum standard requirements while Encore completes the construction of its fixed-base ope rator facilities. [FAA Exhibit 1, Item 6, page 10.]

Until November 2007, Asheville Jet was the only fixed-base operator on the Airport. [FAA Exhibit 1, Item 6, page 1.] As of June 11, 2008, Encore was still in the design phase of its operations at the Airport a nd had not yet begun conducting any fixed-base operator activities. [ See FAA Exhibit 1, Item 13, exhibi t b, page 3.] Although Encore

5 In order to get an additional 10 years and an option, Encore would have to invest another $4.5 million on

top of the $3.5 million. [FAA Exhibit 1, Item 5, attachment 9, page 16.]

Page 3had the right under its sublease to use temporary facilities for fuel sales during the design and construction phases, Encore advised th e Airport Director on May 30, 2008, that it did not intend to exercise that right. [FAA Exhibit 1, Item 13, exhibit F.]

In December 2007, the Respondents entered into a third management agreement with Asheville Jet to manage another bulk hanga r constructed by the Au thority for Asheville Jet’s benefit. [FAA Exhibit 1, It em 6, attachment A, pages 1-2.]

On January 28, 2008, Complainant filed its Pa rt 16 Complaint with the FAA. [FAA Exhibit 1, Item 3.] At the same time, Comp lainant filed a Certification of Good Faith [FAA Exhibit 1, Item 4] and the Declaration of Ken Allison, President of Asheville Jet [FAA Exhibit 1, Item 5.]

On February 14, 2008, Complainant filed its First Supplemental Declaration of Ken Allison, President of Asheville Je t. [FAA Exhibit 1, Item 8.]

On February 15, 2008, FAA docketed the Complaint at Docket No. 16-08-02. [FAA Exhibit 1, Item 7.]

On March 12, 2008, Respondents filed their Answer to the Complaint. [FAA Exhibit 1,
Item 6.]

On May 15, 2008, Complainant filed its Reply to the Answer. [FAA Exhibit 1, Item 12.]

On June 12, 2008, Respondents filed their Rebuttal. [FAA Exhibit 1, Item 13.]

On August 22, 2008, the FAA sent a notice reque sting additional information from the parties. [FAA Exhibit 1, Item 14.]

On September 15, 2008, Respondents submitted their response to the request for

additional information. [FAA Exhibit 1, Item 15.]

On October 7, 2008, Complainant submitted its re ply to the Respondent’s response to the request for additional information. [FAA Exhibit 1, Item 16.]

IV. ISSUES

Upon review of the allegations and the releva nt Airport-specific circumstances, the FAA has determined that the following issues requir e analysis in order to provide a complete review of the Respondents’ compliance w ith applicable federal law and policy:

3⁄4 Issue 1: Whether Respondents are in violation of grant assurance 5, Preserving Rights and Powers, grant assurance 22, Economic Nondiscrimination , grant assurance 23, Exclusive Rights , and grant assurance 27, Use by Government Aircraft , by granting a preferential use ap ron, upon which federal funds were expended, to a competing fixed-base operato r. [FAA Exhibit 1, Item 3, pages 5-7.]

Page 43⁄4 Issue 2: Whether the Respondents are currently in violation of grant assurance 22,

Economic Nondiscrimination , and grant assurance 23, Exclusive Rights, by (a) requiring the Complainant to comply with the Airport minimum standards while not requiring the competing fixed-base operator to comply with the same standards and (b) granting substant ially favorable sublease terms to the competing fixed-base operator. [FAA Exhibit 1, Item 3, page 8.]

Our determination in this matter is based on the applicable federal law and FAA policy, review of the arguments and supporting docum entation submitted by the parties, and the

administrative record reflected in the attached FAA Exhibit 1. 6

V. APPLICABLE FEDERAL LAW AND FAA POLICY

The following is a discussion pertaining to (a ) the FAA’s enforcemen t responsibilities; (b) the FAA compliance program; (c) statutes, sponsor assurances, and relevant policies; and (d) the complaint process.

A. FAA Enforcement Responsibilities

The Federal Aviation Act of 1958, as amended, 49 U.S.C. § 40101, et seq., assigns the

FAA Administrator broad res ponsibilities for th e regulation of air commerce in the interests of safety, security, and development of civil aeronautics. The federal role in encouraging and developing civil aviation ha s been augmented by various legislative actions, which authorize programs for providi ng funds and other assistance to local communities for the development of airport faci lities. In each such program, the airport sponsor assumes certain obligations, either by contract or by rest rictive covenants in property deeds and conveyance instruments, to maintain and operate its airport facilities safely, efficiently, and in accordance with sp ecified conditions. Commitments assumed by airport sponsors in property conveyance or grant agreements are important factors in maintaining a high degree of safety and efficiency in airport design, construction, operation, and maintenance, as well as en suring the public reas onable access to the airport. Pursuant to 49 U.S.C. § 47122, the FAA has a statutory mandate to ensure that airport owners comply with their federal grant assurances.

B. FAA Airport Compliance Program

The FAA discharges its responsibility for en suring that airport sponsors comply with their federal obligations through its Airpor t Compliance Program. Sponsor obligations are the basis for the FAA’s airport complian ce effort. The airport owner accepts these obligations when receiving federal grant funds or when accepting the transfer of federal property for airport purposes. The FAA in corporates these obligations in grant agreements and instruments of conveyance to pr otect the public’s inte rest in civil aviation and to ensure compliance with federal laws.

6 The attached FAA Exhibit 1 provid es the Index of the Administrative Record in this proceeding.

Page 5The FAA designed the Airport Compliance Program to ensure the availability of a national system of safe and properly main tained public-use airports which airport sponsors operate in a manner c onsistent with their federal obligations and the public’s

interest in civil aviation. Th e Airport Compliance Program does not control or direct the operation of airports. Rather, it monitors th e administration of valuable rights, which airport sponsors pledge to the people of th e United States in exchange for monetary grants and donations of federal property, to ensure that airport sponsors serve the public

interest.

FAA Order 5190.6A, Airport Compliance Requirements, October 2, 1989, (hereinafter Order) sets forth policies and procedures fo r the FAA Airport Compliance Program. The Order is not regulatory and is not controlling with regard to airport sponsor conduct; rather, it establishes the policies and proce dures for FAA personnel to follow in carrying out the FAA’s responsibilities for ensuring airport compliance. It provides basic guidance for FAA personnel in interpreting a nd administering the various continuing commitments airport owners make to the Un ited States as a cond ition for the grant of federal funds or the conveyance of federal property for airport purposes. The Order, inter alia, analyzes the various obligations set forth in the standard airpor t sponsor assurances, addresses the application of the assurances in the operation of public-use airports, and facilitates interpreta tion of the assurances by FAA personnel.

The FAA compliance program is designed to achieve voluntary compliance with federal obligations accepted by owners a nd/or operators of public-use airports developed with FAA administered assistance. Therefore, in addressing allegations of noncompliance, the FAA will make a determination as to whether an airport sponsor is currently in compliance with the applicable federal obligat ions. Consequently, the FAA will consider the successful action by the ai rport to cure any alleged or potential past violation of applicable federal obligation to be grounds for dismissal of such allegations. [ See e.g. Wilson Air Center v. Memphis a nd Shelby County Airport Authority , FAA Docket No. 16-99-10, (August 30, 2001) (Final Decision and Order).]

C. Statutes, Sponsor Assurances, and Relevant Policies

As a condition precedent to providing airport development assistance under the Airport and Airway Improvement Act of 1982 (AAIA), codified at Title 49 U.S.C. § 47101, et seq., the Secretary of Transportati on receives certain assurances from the airport sponsor.

The AAIA, 49 U.S.C. § 47101, et seq., sets forth assurances to which an airport sponsor receiving federal financial as sistance must agree as a c ondition precedent to receipt of such assistance. These sponsorship re quirements are included in every airport improvement program (AIP) grant agreement. Upon acceptance of an AIP grant by an airport sponsor, the assurances become a binding obligation between the airport sponsor and the federal government.

Page 6Complainant alleges violations of four (4) grant assurances, which are listed below in numerical order: grant assurance 5, Preserving Rights and Powers , grant assurance 22,

Economic Nondiscrimination , grant assurance 23, Exclusive Rights , and grant assurance 27, Use by Government Aircraft

.

(1) Grant Assurance 5, Preserving Rights and Powers

Grant assurance 5, Preserving Rights and Powers , requires the airport owner or sponsor to retain all rights and powers necessary to ensure the continued operation of the airport consistent with its federal obligations. This assurance implements the provisions of the Airport and Airway Improvement Act of 1982 (AAIA), 49 U.S.C. § 47107(a), et seq., and requires, in pertinent part, that the owner or sponsor of a federally obligated airport “...will not take or permit any action which would operate to deprive it of any of the rights and powers necessary to perform any or all of the terms, conditions, and assurances in the grant agreement without the written approval of the Secretary, and will act promptly to acquire, extinguish, or modify a ny outstanding rights or claims of right of

others which would interfere with such performance by the sponsor.”

Grant assurance 5 states in pertinent part:

a. [The airport owner or sponsor] will not take or permit any action which would operate to deprive it of any of the righ ts and powers necessary to perform any or all of the terms, cond itions, and assurances in the grant agreement without the written approval of the Secretary, and will act promptly to acquire, extinguish or modify any outstanding right s or claims of right of others which

would interfere with such performance by the sponsor. This shall be done in a manner acceptable to the Secretary.

b. [The airport owner or sponsor] will not sell, lease, encumber, or otherwise transfer or dispose of any part of its title or other interests in the property shown on Exhibit A to this application or, for a noise compatibility program project, that portion of the property upon which federal funds have been expended, for the duration of the terms, conditions, and assurances in the grant agreement without approval by the Secretary. If the transferee is found by the Secretary to be eligible under T itle 49, United States Code, to assume the obligations of the grant agreement and to have the power, authority, and financial resources to carry out all such obligations, the sponsor shall insert in the contract or document transferring or disposing of the sponsor’s interest, and make binding upon the transferee all of the terms, conditions, and

assurances contained in this grant agreement.

(2) Grant Assurance 22, Economic Nondiscrimination

The owner of any airport developed with fede ral grant assistance is required to operate the airport for the use and benefit of the public . Grant assurance 22, Economic

Nondiscrimination , deals with both the reasonable ness of airport access and the

Page 7prohibition of adopting unjustly discriminato ry conditions as a potential for limiting access. Grant assurance 22 of the prescribed sponsor assurances implements the provisions of 49 U.S.C. § 47107( a)(1) through (6), and requ ires, in pertinent part:

[The airport owner or sponsor] will make the airport available as an airport for public use on reasonable terms and without unjust discrimination to all types,

kinds and classes of aeronautical activiti es, including commercial aeronautical activities offering services to the public at the airport. [Assurance 22(a).]

Each fixed-base operator at the airport sh all be subject to the same rates, fees, rentals, and other charges as are uniformly applicable to all other fixed-base operators making the same or similar uses of such airport and utilizing the same or similar facilities. [Assurance 22(c).]

[The airport owner or sponsor] will not ex ercise or grant any right or privilege which operates to prevent any person, fi rm, or corporation operating aircraft on the airport from performing any servi ces on its own aircraft with its own employees (including but not limited to ma intenance, repair, and fueling) that it may choose to perform. [Assurance 22(f).]

In the event the sponsor itself exercises a ny of the rights and pr ivileges referred to in the assurance, the servi ces involved will be provided on the same conditions as would apply to the furnishing of such se rvices by commercial aeronautical service providers authorized by the sponsor under these provisions. [Assurance 22(g).]

The sponsor may establish such reasona ble, and not unjustly discriminatory, conditions to be met by all users of the ai rport as may be necessary for the safe and efficient operation of the airport. [Assurance 22 (h).]

The sponsor may prohibit or limit any gi ven type, kind or class of aeronautical use of the airport if such ac tion is necessary for the safe operation of the airport or necessary to serve the civil aviation needs of the public. [Assurance 22(i).]

Subsection (h) qualifies subsect ion (a), and subsection (i) re presents an exception to subsection (a) to permit the sponsor to exercise control of the airport sufficient to preclude unsafe and inefficient conditions that would be detrimental to the civil aviation needs of the public.

In all cases involving restrictions on airport use imposed by airport owners for safety and efficiency reasons, the FAA will make the final determination on the reasonableness of

such restrictions when those restrictions de ny or limit access to, or us e of, the airport.
[ See FAA Order 5190.6A, Airport Compliance Requirements , October 2, 1989, paragraph 4-8(a)(1).]

Page 8(3) Grant Assurance 23, Exclusive Rights

Title 49 U.S.C. § 40103(e), provides, in relevant part, that “there shall be no exclusive right for the use of any landi ng area or air navigation fac ility upon which federal funds have been expended.”

Title 49 U.S.C. § 47107(a)(4) similarly provides, in pertinent part, that “there will be no exclusive right for the use of the airport by any person providing, or intending to provide, aeronautical services to the public.”

Grant assurance 23, Exclusive Rights , of the prescribed sponsor assurances implements both statutory provisions, a nd states in its entirety:

[The airport owner or sponsor] will permit no exclusive right for the use of the airport by any person providing, or intending to provide, aeronautical services to the public. For purposes of this paragraph, the providing of the services at an airport by a single fixed-base operator shall not be construed as an exclusive right if both of the following apply:

a. It would be unreasonably costly, burden some, or impractical for more than one fixed-base operator to provide such services, and

b. If allowing more than one fixed-base operator to provide such services would require the reduction of space leased pursuant to an existing agreement between such single fixed- base operator and such airport.

[The airport owner or sponsor] further agr ees that it will not, either directly or indirectly, grant or permit any person, firm , or corporation, the exclusive right at the airport to conduct any aer onautical activities, incl uding but not limited to, charter flights, pilot training, aircraft rental and sightse eing, aerial photography, crop dusting, aerial advertising and surveyi ng, air carrier operati ons, aircraft sales and services, sale of av iation petroleum products wh ether or not conducted in conjunction with other aerona utical activity, repair and maintenance of aircraft, sale of aircraft parts, and any other activities which because of their direct relationship to the operation of aircraft can be regarded as an aeronautical activity, and that it will terminate any exclusive ri ght to conduct an aeronautical activity now existing at such an airport before the grant of any assistance under Title 49,

United States Code.

(4) Grant Assurance 27, Use by Government Aircraft

Grant assurance 27, Use by Government Aircraft , states in its entirety:

[The airport sponsor] will make available all of the facilities of the airport developed with federal financial assistan ce and all those usable for landing and

takeoff of aircraft to th e United States for use by government aircraft in common

Page 9with other aircraft at all times without charge, except, if the use by government aircraft is substantial, ch arge may be made for a reas onable share, proportional to such use, for the cost of operating and maintaining the facilities used. Unless otherwise determined by the Secretary, or otherwise agreed to by the sponsor and the using agency, substantia l use of an airport by government aircraft will be considered to exist when operations of su ch aircraft are in excess of those which, in the opinion of the Secretary, would unduly interfere with use of the landing areas by other authorized aircraft, or during any calendar month that –

a. Five (5) or more government aircraft are regularly based at the airport or on land adjacent thereto; or

b. The total number of movements (coun ting each landing as a movement) of government aircraft is 300 or more, or the gross accumulative weight of government aircraft using the airport (the total movement of government aircraft multiplied by gross weights of such aircraft) is in excess of five million pounds.

D. The Complaint Process

Pursuant to 14 CFR, Part 16, § 16.23, a person di rectly and substantially affected by any alleged noncompliance may file a complaint with the FAA. The complainant shall provide a concise but complete statement of the fact s relied upon to substantiate each allegation. The complaint shall also descri be how the complainant was directly and substantially affected by the things done or omitted by the respondents. [14 CFR, Part 16, § 16.23(b)(3,4).]

If, based on the pleadings, there appears to be a reasonable basis for further investigation, the FAA will investigate the subject matter of the complaint. In rendering its initial determination, the FAA may rely entirely on th e complaint and the responsive pleadings provided. Each party shall file documents it considers sufficient to present all relevant facts and arguments necessary for the FAA to determine whether the sponsor is in compliance. [14 CFR, Part 16, § 16.29.]

The proponent of a motion, request, or order has the burden of proof. A party who has

asserted an affirmative defense has the burde n of proving the affirmative defense. This standard burden of proof is consistent w ith the Administrative Procedure Act (APA) and federal case law. The APA provision states, “[e]xcept as otherwise provided by statute, the proponent of a rule or order has the burde n of proof.” [5 U.S.C. § 556(d).] [ See also, Director, Office of Worker’s Compensa tion Programs, Department of Labor v.

Greenwich Collieries , 512 US 267, 272 (1994); Air Canada et al. v. Department of Transportation , 148 F3d 1142, 1155 (DC Cir, 1998).] Title 14 CFR § 16.229(b) is consistent with 14 CFR § 16.23, which require s that the complainant must submit all documents then available to support his or her complaint. Similarly, 14 CFR § 16.29 states that “[e]ach party shall file documents that it considers suffi cient to present all

Page 10relevant facts and argument necessary for the FAA to determine whether the sponsor is in compliance.”

VI. ANALYSIS and DISCUSSION

Upon review of the allegations and the releva nt airport-specific circumstances, the FAA has determined that the following issues requir e analysis in order to provide a complete review of the Respondents’ compliance w ith applicable federal law and policy:

3⁄4 Issue 1: Whether Respondents are in violation of grant assurance 5, Preserving Rights and Powers, grant assurance 22, Economic Nondiscrimination , grant assurance 23, Exclusive Rights , and grant assurance 27, Use by Government Aircraft , by granting a preferential use ap ron, upon which federal funds were expended, to a competing fixed-base operato r. [FAA Exhibit 1, Item 3, pages 5-7.]

3⁄4 Issue 2: Whether the Respondents are cu rrently in violation of grant assurance 22, Economic Nondiscrimination , and grant assurance 23, Exclusive Rights, by (a) requiring the Complainant to comply with the Airport minimum standards while not requiring the competi ng fixed-base operator to comply with the same standards and (b) granting substa ntially favorable sublease terms to the competing fixed-base operator. [FAA Exhibit 1, Item 3, page 8.]

A. Issue 1: Preferential Use Apron

Under Issue 1, Complainant alleges Respondents are in violation of grant assurance 5, Preserving Rights and Powers, grant assurance 22, Economic Nondiscrimination , grant assurance 23, Exclusive Rights , and grant assurance 27, Use by Government Aircraft , by granting a preferential use apron, upon wh ich federal funds were expended, to a competing fixed-base operator. [F AA Exhibit 1, Item 3, pages 5-7.]

There is a difference between “preferential use” and “exclusive use.” A tenant having a “preferential use” right has priority to use that asset. At times when the tenant having the preferential use right is not using the asset, other tenants may use the asset so long as

their use does not interfere with the operations from the pref erential user. In contrast, a tenant having an “exclusive use” right retains the sole authority to use a particular asset. 7

7 Respondents defined preferential use as it applies to aprons and ramps at the Airport as “meaning that a

lessee shall have the first right to use of the Aircra ft Parking Apron assigned to it. The Authority shall have the right to access and assign the use of that Ai rcraft Parking Apron on a second-priority-use basis to other aeronautical users when such apron is not reasonably required for the lessee’s own operations. When areas are subleased on a preferential-use basis, the Authority considers the areas to be available to all aeronautical users of the Airport (not merely subtenants).” [FAA Exhibit 1, Item 15, page 1.] Complainant agrees with this definition. [FAA Exhibit 1, Item 16, page 1.]

The Respondents defined exclusive use as it applies to aprons and ramps at the Airport as “meaning space

leased by a lessee that is used exclusively by that le ssee. The Authority does not have the right, without the permission of that lessee, to allow any third party to use that lessee’s exclusive use aprons or ramps.” [FAA Exhibit 1, Item 15, page 2.] Complainant agrees with this definition. [FAA Exhibit 1, Item 16, page 2.]

Page 11The Airport has two major apron areas, 8 the general aviation fixed-base operator ramp and the air carrier commercial ramp. The ge neral aviation fixed-base operator ramp comprises the south ramp, middle ramp, and north ramp. Asheville Jet subleases and controls the south ramp (shown on the left in blue in Figure 1 below), the middle ramp (shown in blue and red in the middle section of Figure 1 below), and part of the north ramp (shown on the right in orange in Figure 1 below). Encore subleases the other part of the north ramp (shown on the righ t in green in Figure 1 below).

Figure 1: Fixed-Base Operator (FBO) Pref erential and Exclusive Use Ramps 9

When Encore becomes operational, it will cont rol that part of the north ramp (shown in green) contained in its sublease. (Neither Asheville Jet nor En core has a sublease for, or control over, the air carrier commercial ramp, which is not depicted here.) The north and middle ramps have a load-bearing capacity of 60,000 pounds for dual-wheel aircraft. The

8 The terms “apron” and “ramp” are used interchangeably in this document to describe a defined areas on

the Airport intended to accommodate aircraft for purposes of loading or unloading passengers, mail, or cargo; refueling; parking; or maintenance. [ See Aeronautical Information Manual / Federal Aviation Regulations (AIM/FAR) 2006, page 359.]

9 Figure 1 is from FAA Exhibit 1, Item 15, attachment A. Complainant disputes that the orange area is

“preferential use” and argues instead that it is “exclusive use” via a l ease agreement with the Complainant. [ See FAA Exhibit 1, Item 16, a ttachment 1.] Whether that space is preferential use or exclusive use for the Complain ant does not alter the fact that the Comp lainant controls that ramp area.

Page 12south ramp has a load-bear ing capacity of 100,000 pounds for dual-wheel aircraft. All three of these ramps are public-use aprons avai lable to aeronautical users of the Airport. 10

[FAA Exhibit 1, Item 6, attachment L.]

The record shows Respondents entered into a sublease agreement with Encore that included leasing part of the north ramp on a preferential use 11 basis for $.30 per square foot annually. This area is show n in Figure 1 above in green. [ See FAA Exhibit 1, Item 15, attachment A, and also Item 5, attachment 8.]

Complainant argues the portion of the nor th ramp subleased to Encore on a preferential use basis is the only apron at the Airport on which many military aircraft, including C-130’s, can be serviced. As a re sult of granting the pr iority use privilege to Encore, Complainant argues Asheville Jet will be prevented fr om servicing certain military aircraft. [FAA Exhibit 1, Item 3, page 7.]

Subleases involving Federal Funds

Complainant makes a point of stating that the apron area subleased to Encore on a preferential use basis was financed or im proved, in part, with federal funds. [FAA Exhibit 1, Item 3, page 5.] Respondents do not dispute this, but counter that the apron

area subleased to Asheville Jet was also fi nanced or improved, in part, with federal

funds. 12 [ See FAA Exhibit 1, Item 13, page 3.]

Airport projects funded with fede ral grants are expected to be for the benefit and use of the aviation public. When an airport area is available and accessible for public-use

aeronautical services – even if that area is managed by a single en tity – the FAA may find it appropriate and desirable to use federal f unds for construction or improvements of that area. The FAA permits airport sponsors to lease the federally f unded apron area in the immediate vicinity of a fixed-base operator to that operator so it can manage the public’s aeronautical use of that ramp. [ See FAA Order 5190.6A, Airport Compliance Requirements , October 2, 1989, section 5, “Use of Airport Property,” paragraph 4- 17,k(2).] That is the situati on in this case. The apron areas under sublease to both

10 The administrative record referred to the various ramps by different names and descriptions. For

example, Complainant refers to the north ramp and south ramp; Respondents refer to the general aviation ramp and air carrier ramp. We contacted the Airport Director, David Edwards, Jr. on June 17, 2008, and November 5, 2008, for clarification of the terminology only.

11 Respondents state this preferential use apron rema ins open, available, and accessible to the traveling

public and the aeronautical users of the Airport; it is not available to competitors of Encore, such as the Complainant, at any time. [FAA Exhibit 1, Item 13, page 3.]

12 Complainant argues that its own apron was construc ted and financed by Asheville Jet’s prior owners

without any federal funds. [FAA Exhibit 1, Item 12, page 4.] Respondents state, however, that a large portion of Asheville Jet’s ramp was constructed and rehabilitated using federal funds when the area was subleased to Piedmont/Hawthorne, Asheville Jet’s predeces sor at that location. [FAA Exhibit 1, Item 13, exhibit B, #9.] The administrative record includes a 1985 grant agreement showing the approved project included overlaying the general aviation apron and expanding the general aviation apron. [FAA Exhibit 1, Item 13, exhibit E.]

Page 13Asheville Jet and Encore are available and acce ssible to the aeronautical users of the Airport. [ See FAA Exhibit 1, Item 13, page 3.]

Assurance 5, Preserving Rights and Powers

Complainant argues the Respondents are in violation of grant assurance 5, Preserving Rights and Powers , by entering into a sublease agreement with Encore for a preferential use apron. Complainant states, “Encore’ s Preferential Use Apron is explicitly incorporated into the lease hold through a $.30 per square f oot apron rent fee and is, accordingly, more than a ‘special privilege.’” [FAA Exhibit 1, Item 3, page 6.]

Assurance 5 prohibits the airport sponsor from giving away rights and powers it needs to control and operate the Airport as an airport. It obligates th e sponsor to retain financial and legal control of ai rport property to ensure the air port’s continued operation as an airport. [ See Section V (B)(1), Applicable Federal Law and FAA Policy , in this determination.]

Entering into an agreement for a preferential use apron is not inconsistent with grant assurance 5. The agreement with Encore does not give away rights and powers needed to control and operate the Airport. The agr eement does not transfer financial or legal control of Airport property to Encore. It merely permits Encore to offer aeronautical services to the public at a specified loca tion on the Airport in exchange for lease payments to the Airport. This is not substant ially different from what Asheville Jet has in its own sublease agreement in which it manage s apron areas on the Airport for the benefit of the aviation public.

Apart from the general aviation apron areas subleased to Encore and to Asheville Jet, Respondents state the Airport “controls a sign ificant amount of comm on use [air carrier] commercial ramp containing hard stands th at are capable of supporting and handling military aircraft that are too heavy to be handled on either Encore’s apron area or Asheville Jet’s apron area.” [FAA Exhibit 1, Item 6, page 6.] The area controlled by the Airport consists of approximately 280,000 square feet and has a load -bearing capacity of 170,000 pounds for dual-wheel aircraft. [FAA Ex hibit 1, Item 6, attachment A, page 4, #15.] By contrast, the general aviation ramp areas subleased to Encore and to Asheville Jet have a load-bearing capacity of 60,000 pound and 100,000 pounds, respectively, for dual-wheel aircraft. [FAA Exhibit 1, Item 6, attachment A, page 4, #14.] The Airport

retains control of common areas that will handle the heaviest aircraft.

Director’s conclusion on assurance 5 The Respondents have not given away rights and powers needed to control and operate the Airport as an airport. There is no r ecord evidence to suggest the airport sponsor failed to maintain financial and legal contro l of the Airport or is unable operate the Airport as an airport. These are the essent ial elements of assurance 5. Therefore, the Director finds the Respondents are not curr ently in violation of grant assurance 5, Rights

and Powers , by including a preferential use apron in Encore’s sublease.

Page 14Assurance 22, Economic Nondiscrimination

Complainant argues the Respondent s violated grant assurance 22, Economic

Nondiscrimination , by giving Encore preferential us e of an apron upon which federal funds were expended and that had previously been used by the Complainant and other aviation users. [FAA Exhi bit 1, Item 3, page 7.]

The record shows that, in the past, Ashevill e Jet had used the apron now subleased to Encore to service military aircraft pursuant to federal contracts. [FAA Exhibit 1, Item 6, page 6.] By converting this apron to preferential use fo r Encore, Complainant states Asheville Jet “will be limited in its ability to service military jets.” [FAA Exhibit 1, Item 3, page 7.] Specifically, Complainant st ates the preferential use apron is “the only ramp large enough and suitable for fueling cert ain military aircraft, including Lockheed C-130 Hercules transport aircraft.” [FAA Exhibit 1, Item 5, page 4, #20.]

Respondents dispute this claim, noting that Asheville Jet c onducts most of its fueling operation for military aircraft on the south ramp area, 13 which is subleased to the Complainant. Respondents state the south ra mp apron subleased to Asheville Jet is superior to the apron subleased to Encore because it is approximately two times larger and is capable of hand ling heavier aircraft. 14 [FAA Exhibit 1, Item 6, page 6.]

In addition, Respondents identify other comm on use air carrier commercial ramp areas suitable for fueling military aircraft that have a higher load-bearing capacity than either the ramp subleased to Encore or th e ramps subleased to Asheville Jet. 15 Respondents argue that subleasing the apron area to Encore has “not limited Asheville Jet’s ability to fuel military aircraft in the slightest degree.” [FAA Exhibit 1, Item 6, page 6.] Respondents provide photographs showing large military aircraft, including C-130s, being serviced on a ramp they swear under oa th is subleased to Asheville Jet. [FAA Exhibit 1, Item 13, page 2, and Item 13, e xhibit A; and Item 13, exhibit B, #3.]

Even though Complainant may have the abilit y to service military aircraft from ramp space other than the ramp subleased to Enco re, Complainant argues that the shift to different ramp space will greatly inconvenience its customers. [FAA Exhibit 1, Item 12, page 3.] Because of the location and distan ce from the ramp space available to Asheville Jet for fueling large military aircraft and Asheville Jet’s terminal, people cannot walk between the two areas; they ha ve to be shuttled from the ramp to the terminal. [FAA Exhibit 1, Item 12, page 5.] Complainant stat es the ramp area subleased to Encore was purposefully constructed adjacent to Asheville Jet’s terminal w ith the intent of servicing military aircraft at that location. [FAA Exhi bit 1, Item 12, page 4.] Complainant states

13 See Figure 1 on page 12 of this document. South ramp area is the blue section on the left.

14 The ramp area subleased to Encore has a load-bearing capacity of 60,000 pounds for dual-wheel aircraft;

the ramp areas subleased to Asheville Jet include ra mp space with a load-bearing capacity of 100,000 pounds for dual-wheel aircraft. [FAA Exhibit 1, Item 6, page 6.]

15 The Airport controls common use air carrier commercial ramp space consisting of approximately 280,000

square feet with a load-bearing cap acity of 170,000 pounds for dual-wheel aircraft. Respondents state this area is suitable for fueling military aircraft. [FAA Exhibit 1, Item 6, attachment A, page 4, #15.]

Page 15the ramp area identified by the Respondents as being more efficient for fueling military aircraft is at the opposite end of Complainant’s lease hold from the Encore ramp; Complainant argues the Encore ramp location is more desirable. 16 ( See Figure 2, Complainant’s Fixed-Base Operator Site, below.)

Figure 2: Complainant’s Fixed-Base Operator Site

Asheville Jet’s leasehold is outlined in blue ; the ramp Complainant refers to as being less desirable – and at the opposite end of its leasehold – is outlined in white. Encore’s ramp, which Complainant stat es is a more desirable location for Complainant’s fueling operations, is outlined in red. (Note: The aerial photograph in Figure 2 is shown from the opposite angle to the aerial photograph in Figure 1. In Figure 1, the Encore ramp is shown in green on the right side of the photograph. That same space is shown in Figure 2 outlined in red on the bottom left side of the

p hoto g ra p h. )

Complainant argues military aircraft have easier access for turning around on the Encore ramp. In addition, Complainant argues the As heville Jet ramp is so close to the main

16 See FAA Exhibit 1, Item 12, page 4; and Item 12, exhibit 2, photo: compare red space for Encore ramp

and white space for Asheville Jet’s ramp with bl ue outlining the perimeter of Complainant’s entire

leasehold.

Page 16Airport terminal that unavoidable blasts from jet engines will damage the Airport terminal if that ramp is used. [FAA Exhibit 1, Item 12, page 5.]

Previous Case Cites

Both the Complainant and Respondents cite pr evious FAA Part 16 decisions to support their respective positions. However, the cases cited do not support either one.

Complainant cites Platinum Aviation and Platinum Jet Center BMI v. BloomingtonNormal Airport Authority , FAA Docket No. 16-06-09 (June 4, 2007) (Director’s Determination) to support its position that Encore may not be permitted to have a preferential use apron. [FAA Exhibit 1, Item 3, page 5.] In Platinum Aviation , the tenant asserted its right to exercise what it determ ined was a priority use in an area that interfered with active public-use taxiways and movement areas. The tenant parked

aircraft and vehicles in this “priority use” area, blocking ac cess to other airport users and creating a safety issue at th e airport. The FAA found the airport could not permit such activity and any priority use affecting activ e public-use taxiways and movement areas had to be eliminated. [ See Platinum Aviation and Platinum Jet Center BMI v. Bloomington-Normal Airport Authority , FAA Docket No. 16-06-09 (June 4, 2007) (Director’s Determination).]

In the current case, Encore’s preferential use ramp area does not interfere with active public-use taxiways and movement areas. In addition, Encore’s sublease states specifically that “for the pur poses of egress and ingress bot h aircraft and vehicles may

traverse the Premises if nece ssary.” [FAA Exhibit 1, Item 6, attachment E, page F-3.]

Respondents cite two cases to support their pos ition that an airport sponsor may provide preferential use ramp or apron space: (1) Roadhouse Aviations, LLC v. City of Tulsa & the Tulsa Airports Improvement Trust , FAA Docket No. 16-05-08 (June 26, 2007) (Final Decision and Order), and (2) The Aviation Center, Inc. v. City of Ann Arbor, Michigan

, FAA Docket No. 16-05-01 (December 16, 2005) (Director’s Determination). [FAA Exhibit 1, Item 6, page 7.]

Roadhouse Aviation discusses access using taxilanes that run through another tenant’s

subleased tie-down blocks. The taxilanes were to be accessible at all times. In that case,

the FAA found the access was reasonable and not a violation of th e grant assurances.
The focus in Roadhouse Aviation is on the non-exclusive use of taxilanes. Even though the case mentions an exclusive use ramp that does not include the pr ovision of taxilane access, the case neither discusses nor suppor ts any position regarding preferential use ramps or aprons. [ See Roadhouse Aviations, LLC v. City of Tulsa & the Tulsa Airports Improvement Trust , FAA Docket No. 16-05-08 (June 26, 2007) (Final Decision and Order).]

Neither does Aviation Center discuss or support Respondents’ position that an airport sponsor may provide preferential use ramp or apron space. In Aviation Center , the ramp issue involves one tenant providing service us ing the airport termin al apron. This was not an exclusive-use arrangement. In fact, the complainant in that case also provided

Page 17services from the terminal apron, just on a sm aller scale. The terminal facilities were available to the public and customers of all fixed-base operators, and the complainant was free to provide aeronautical services to the pub lic at the terminal and the terminal apron.
[ See The Aviation Center, Inc. v. City of Ann Arbor, Michigan , FAA Docket No. 16-05- 01 (December 16, 2005) (Director’s De termination), page 26-27.]

Director’s conclusion on assurance 22 Asheville Jet is not prevented from fueling large military aircraft as a result of the Respondents subleasing a pref erential use ramp to Encore. Asheville Jet is inconvenienced by this change, particularly si nce the Encore ramp is located adjacent to the Complainant’s terminal. Nonetheless, Asheville Jet is not being denied the opportunity to provide the same fixed-base opera tor services it has provided in the past or the same fixed-base operator services Encore will be able to provide.

Assurance 22 obligates airport sponsors to tr eat similarly situated airport tenants in a comparable fashion. The record shows both Asheville Jet and Encore have either exclusive use or preferential use apron areas within their respec tive leaseholds. [ See FAA Exhibit 1, Item6, page 6, and Item 6, attachments J and L for Asheville Jet; and Item 6, attachment E, page A-1 for Encore.] While Complainant makes a point of stating federal funds were used on the apron that is now in Encore’s leasehold, 17 Respondents point out that the ramp area subleased to Asheville Jet wa s also improved with federal

funds. 18 Both fixed-base operators manage their respective ramps.

Assurance 22 does not require the airport sponsor to offer convenience and efficiency to its tenants and airport users. It does not ob ligate the airport sponsor to provide a certain

level of cost effectiveness to its tenants and ai rport users. It does not prevent an airport sponsor from changing the use of airport stru ctures and facilities from their initial

purpose.

The Airport Compliance Program does not control or direct the operation of airports. Rather, it monitors the administration of the valuable rights that ai rport sponsors pledge to the people of the United States in exch ange for monetary grants and donations of federal property to ensure th at airport sponsors serve the pub lic interest. How the airport sponsor chooses to manage its airport is with in its own discretion ab sent violating federal law or policy.

Whether or not to provide a preferential us e agreement to Encore for the ramp space more conveniently located to Asheville Jet’s terminal – but not within Asheville Jet’s leasehold – is an Airport business decision. The FAA does not normally intervene in the business decisions of the airport sponsors wh ere grant assurance violations are not at issue. [ See Jet 1 Center, Inc. v. Na ples Airport Authority , FAA Docket No. 16-04-03, (January 4, 2005) (Director’s Determination); and also M. Daniel Carey and Cliff

17 See FAA Exhibit 1, Item 3, page 5.

18 See FAA Exhibit 1, Item 6, page 6. See also footnote #12 in this determination.

Page 18Davenport v. Afton-Lincoln County Muni cipal Airport Joint Powers Board , FAA Docket No. 16-06-06, (January 19, 2007) (Director’s Determination).]

Complainant has not demonstrated that Ashevi lle Jet has been directly and substantially affected by the Respondents’ action to sublease a ramp area to Encore 19 that was previously available to the Complainant. Bo th Asheville Jet and Encore have ramp areas within their respective leaseholds. Federal funds were used to improve the ramps in both

leaseholds. Asheville Jet continues to have the ability to fuel military aircraft on either its own ramp space or in one of the common us e air carrier commercial ramp areas. The Administrative Record does not support Co mplainant’s allegation that it has been unjustly discriminated against with regard to the preferential use ramp subleased to Encore. The Director finds the Respondents are not currently in violation of grant assurance 22, Economic Nondiscrimination , as a result of giving Encore preferential use of an apron that had previously been used by the Complainant.

Assurance 23, Exclusive Rights

Complainant alleges Respondents are in violation of grant assurance 23, Exclusive Rights , by granting preferential use of an ap ron upon which federal funds were expended to a competing fixed-base operator. [FAA Exhibit 1, Item 3, page 9.]

Assurance 23, Exclusive Rights , prohibits the airport sponsor from granting to one entity the right to provide a particul ar aeronautical service to the public while preventing other entities from offering the same aeronautical service. 20 An exclusive right is defined to mean: (a) any exclusive right to use the airpor t for conducting any particular aeronautical activity requiring operati on of aircraft, and (b) any exclusive right to engage in the sale or supplying of aircraft, aircraft accessories, eq uipment, or supplies (excluding the sale of gasoline and oil) or aircraft services necessa ry for the operation of aircraft (including the maintenance and repair of aircraft, aircraft engines, propellers, and appliances.) [ See FAA Order 5190.6A, Airport Compliance Requirements , October 2, 1989, paragraph 3-2(d).]

Complainant argues that the Airport has grante d an exclusive right to Encore by giving Encore preferential use of ramp space that was previously used by Asheville Jet. [FAA Exhibit 1, Item 3, page 2.]

Even though Asheville Jet finds itself inc onvenienced by the fact that Encore now has preferential use of a ramp area located adjacen t to the Complainant’s terminal, this is not

a violation of assurance 23. On the contra ry, since the facilities and/or space was available, the Respondents were obligated by grant assurance 23 to negotiate a sublease with Encore once Respondents accepted Enco re’s proposal to establish a fixed-base

19 To prevail in a Part 16 Complaint, the Complainant must demonstrate that it has been directly and

substantially affected by any alleged noncompliance. [ See 14 CFR, Part 16, § 16.23(a).] Complainant is inconvenienced by the sublease to Encore, but it is not prevented from providing service to military aircraft. The FAA does not equate mere inconvenience – even where additional operating costs are incurred – with being substantially affected.

20 See section V.C.(3) of this determination for a full reading of the grant assurance on exclusive rights.

Page 19operation at the Airport. [ See FAA Exhibit 1, Item 6, attachme nt H.] The airport sponsor cannot, as a matter of convenience, choose to have only one fixed-base operator provide services at the airport if the circumstances at the airport do not warrant limiting this

service because it is unreasonabl y costly, burdensome, or impractical to have more than one fixed-base operator. [ See Advisory Circular 150/5190-6, Exclusive Rights at Federally Obligated Airports , January 4, 2007, page 5.]

In this case, the Respondents sought to attr act a second fixed-base operator based on the belief that the Airport could s upport two fixed-base operators and the resulting competition

would benefit the aeronautical users at the Airport. [FAA Exhibit 1, Item 6, page 2.] While the Complainant objects that the Res pondents “did not even commission a market study [to determine the need or viability of] a second [fixed-base operator],” [FAA Exhibit 1, Item 12, page 6] they were unde r no obligation to conduc t such a study. The FAA also permits an airport sponsor to excl ude an incumbent fixed-base operator from participating in a competitive so licitation to bring a second fixed-base operator onto the airport to create a more competitive environment. [ See Advisory Circular 150/5190-6, Exclusive Rights at Fede rally Obligated Airports , January 4, 2007, page 6.]

Complainant states that in order to establish that the Airport granted an exclusive right to Encore by subleasing a federally funded prefer ential use apron, it need only show (a) the Respondents impeded Complainant’s ability to compete on an equa l footing; (b) the imposition has placed a significant burden on Complainant that is not placed on Encore; and (c) Complainant’s allegation is supported by documentation. [ See FAA Exhibit 1, Item 3, page 9.]

(a) Equal Footing Complainant argues that the pr eferential use apron subleased to Encore is the only ramp space suitable for fueling military aircraft. [FAA Exhibit 1, Item 5, page 4, #20.]

Respondents have effectively dispelled this claim by pointing out that the ramp space subleased to Asheville Jet is superior to the ramp space subleased to Encore; Asheville Jet’s ramp space is larger and is capable of handling heavier aircraft . In addition, there are other common use air carrier commercial ramp areas suitable for fueling military aircraft that have a higher lo ad-bearing capacity than either the ramp subleased to Encore or the ramps subleased to Asheville Jet. Respondents argue Ashev ille Jet conducts most of its fueling operation for military aircraft on the south ramp area, which is subleased to the Complainant. [FAA Exhibit 1, Item 6, page 6.] (This claim is discussed more fully under “Assurance 22” above.)

Both Encore and Asheville Jet have preferenti al use or exclusive use ramp space within their respective leaseholds. 21 Asheville Jet is not precluded from fueling military aircraft

21 Both Complainant and Respondents agree Encore has preferential use of the ramp shown in green on

Figure 1 in this document. ( See page 12.) Complainant acknowled ges it has exclusive use ramps as shown in Figure 1, but argues the area shown in oran ge is actually exclusive use rather than preferential use for the Complainant. [ See FAA Exhibit 1, Item 16, attachment 1.] That distinction, while important for the fixed-base operator’s activity, does not demonstrate in any way that Encore enjoys a right or

Page 20simply because Encore now has that same ability. Complainant has not demonstrated that it is unable to compete on an equal foo ting with Encore as a result of including preferential use ramp space within Encore’s sublease. Complainant has its own ramp space included in its own sublease.

The Complainant and its competitor are on an eq ual footing regarding the ability to fuel military aircraft.

(b) Significant Burden Complainant does not specify the burden that significantly affects Complainant over its competitor with regard to th e preferential use apron. As noted above, both entities enjoy preferential use ramp space and both entities have the capability to fuel military aircraft.

It appears from the Complaint that the “significant burden” referred to by the Complainant is related to the enforcement of the Airport’s minimum standards. The Complainant argues that its competitor is permitted to operate until March 31, 2009, without meeting the minimum standard require ments while Complainant must meet those requirements today. [ See FAA Exhibit 1, Item 3, page 9.] However, the minimum standards the Complainant cites refer to fu eling operations, cons truction requirements, and service obligations – not ramp space or apron use. The Complainant’s allegations regarding the Airport minimum standards are addressed below under Issue 2, Minimum

Standards and Favorable Sublease Terms

.

Complainant has not identified a significant bu rden placed on it regarding the use of ramp

space.

(c) Documentation

The Administrative Record includes the Nove mber 9, 2007, sublease with Encore. This document shows preferential use ramp space on an existing apron subleased to Encore for the term of the sublease. It also shows pr eferential use ramp space on a new apron to be constructed adjacent to the existing apron. [FAA Exhibit 1, Item 6, attachment E, page A-1.] This agreement give s Encore the right to control this specific ramp space. The sublease does not include the right to control all ramp space on the Airport. In fact, the Complainant controls the greater portion of ramp space, as shown in Figure 1.

The sublease with Encore does not grant an exclusive right to Encore to provide any particular aeronautical activity on the Airport to the exclusion of the Complainant. [ See FAA Exhibit 1, Item 6, attachment E, page F-3, #9.]

Complainant asserts Encore will enjoy a constructive exclusive right to service military aircraft by virtue of Encore’s preferential us e of a ramp more conve nient for this activity than Complainant’s ramps. As noted ear lier, convenience is not the standard for evaluating whether an aeronautic al tenant enjoys an exclusiv e right or not. Complainant

privilege that is not available to the Complainant. In fact, based on the definitions agreed to by both the Respondents and Complainant ( see footnote # 7) an exclusive use right gives the lessee (in this case, the Complainant) greater control over its ramp (s) than a preferential use right.

Page 21retains the right and ability to provide this same service at a different location on the Airport. Respondents have shown Complain ant has fueled military aircraft on ramps other than the ramp designated fo r Encore in the past.

In the current case, the ramp space in question is not the only ramp space on the Airport, nor is it the only ramp space suitable for fu eling military aircraft. The Administrative Record does not support Complainant’s allega tion that subleasing ramp space to Encore with a preferential use provision rises to the level of an exclusive right.

Director’s conclusion on assurance 23 Complainant has not shown the Respondents gr anted to Encore the exclusive right to conduct any particular aeronaut ical activity or to provide any particular aeronautical service on the Airport. Both Asheville Jet a nd Encore are fixed-base operators with the same opportunity to offer the same aeronautic al services to the aviation public. The Respondents are not currently in violation of grant assurance 23, Exclusive Rights , by granting preferential use of an apron to a competing fixed-base operator.

Assurance 27, Use by Government Aircraft

The focus of grant assurance 27, Use by Government Aircraft , is to make the airport available to government aircraft without charge except where government use is substantial. [ See V.C.(4) in the Applicable Law and Po licy section of this determination.] This is not relevant to the current Complaint. Complainant argues military aircraft can be accommodated on the preferential use ramp only, wh ich – if it were true – could preclude service by the Complainant. [ See FAA Exhibit 1, Item 5, page 4, #20.] That allegation is more appropriately argued under grant assurances 22, Economic Nondiscrimination , and 23, Exclusive Rights , which are addressed above. Ther e is no evidence that government aircraft are prohibited from using the Airport without ch arge for use that is not substantial. The Director finds the Responde nts are not currently in violation of grant assurance 27, Use by Government Aircraft

.

Director’s Conclusion on Issue 1.

The Director finds the Responde nts are not currently in viol ation of grant assurance 5, Preserving Rights and Powers, grant assurance 22, Economic Nondiscrimination , grant assurance 23, Exclusive Rights , or grant assurance 27, Use by Government Aircraft , by granting preferential use of an apron upon which federal funds were expended to a competing fixed-base operator.

• The Respondents have not given away ri ghts and powers needed to control and operate the Airport. (Assurance 5.)

• The Complainant has not been unjustly discriminated against as a result of granting preferential use of a ramp to Encore ; both Asheville Jet and Encore have preferential use or exclusive use apr ons in their respective leaseholds. (Assurance 22.)

Page 22• Complainant has not shown the Respondents granted to Encore the exclusive right to conduct any particular aeronautical activity or to provide any particular aeronautical service on the Airport. Comp lainant’s concern that it will be less convenient to service military aircra ft without having access to Encore’s preferential use ramp does not equate to being denied the right or opportunity to provide such service. (Assurance 23.)

• There is no evidence to suggest government aircraft are prohibited from using the Airport without charge for use that is not substantial. (Assurance 27.)

B. Issue 2: Minimum Standards a nd Favorable Sublease Terms

Under Issue 2, Complainant alleges Respondents are in violation of grant assurance 22,

Economic Nondiscrimination , and grant assurance 23, Exclusive Rights, by (1) by requiring the Complainant to comply with the Airport minimum standards while not requiring the competing fixed-base operator to comply with the same standards, and (2) by granting substantially favorab le sublease terms to the competing fixed-base operator. [FAA Exhibit 1, Item 3, page 8.]

(1) Airport Minimum Standards

The Asheville Regional Airport adopted Airport minimum standards April 19, 2004, which were amended July 19, 2004. [FAA Exhibit 1, Item 5, attachment 4.] These standards establish the minimum requirements fo r a full service fixed-base operator at the Airport.

Only full service fixed-base operators are permitted to dispense aviation fuel to the public. Full service fixed-base operators are required to provide a minimum set of

aeronautical services and activ ities to the public, including (a) passenger transportation services between the subleased premises and other Airport locations, (b) emergency assistance, to include towing or transporting disabled aircraft up to a certain weight, (c)

collection services for landi ng fees, (d) aircraft airframe, engine, and accessory maintenance and repair services, and (e) at least two additional services, which may include any of the following: ai rcraft sales; aircraft rental ; flight training; avionics, instrument, and propeller repair; aircraft charter and air taxi; aircraft storage; specialized commercial flying services; and pilot supply store and flight pla nning facilities. [FAA Exhibit 1, Item 5, attachment 4, pages 21-22.]

Complainant alleges its competitor, Encore, is allowed by its sublease to begin fueling operations immediately without providing the other aeronaut ical service required by the Airport minimum standards for full service fixed-base operators. [ See FAA Exhibit 1, Item 6, attachment 5, page 3.] Complainant states, “Encore is permitted to begin [fixedbase operator] operations effective November 9, 2007, but is not required to meet the same Minimum Standard requirements as Asheville Jet until March 31, 2009.” [FAA Exhibit 1, Item 3, page 9.]

Page 23The Respondents do not dispute Complainant’s clai m that Encore is permitted to sell fuel while not yet meeting the Airport’s minimum standards established for fuel sales. Rather, Respondents argue “an airport opera tor is not required to enforce minimum standards to require identical tone and posture towards all competitors.” [FAA Exhibit 1, Item 6, page 9.] Respondent s point out that th e Airport’s minimum standards include a

section on waivers. It states , “The Authority may further temporarily waive any of the Minimum Standards for non-governmental Oper ators where the Authority, in its sole discretion, deems such waiver to be in the best interest or welfare of the Airport’s operation.” 22 [FAA Exhibit 1, Item 6, attachment K, pages 9-10.] Respondents argue they have temporarily waived the standards for Encore to permit fuel sales.

Encore’s sublease permits it to sell fuel dur ing construction; Res pondents have granted Encore a temporary waiver under the Air port minimum standards until March 31, 2009, to permit such fuel sales. [FAA Exhibit 1, Item 6, pages 9 and 10.] Encore wrote in a May 30, 2008, letter to the Air port Director, “Although we have the right under the lease to use temporary facilities for fuel sales in the interim, it is our intent not to exercise that right. Rather, we intend to begin such sales and operations when the Phase 1 construction is completed.” 23 [FAA Exhibit 1, Item 13, exhibit F.] As of June 12, 2008, Encore had not conducted any fixed-base operato r activities, includi ng selling fuel, at the Airport. [ See FAA Exhibit 1, Item 13, page 5.] The Airport Director confirmed November 5, 2008, that Encore has s till not begun fuel sales.

Assurance 22, Economic Nondiscrimination

Assurance 22, Economic Nondiscrimination , requires airport spons ors to treat similarly situated fixed-base operators in the same manner. [ See Assurance 22 under Section V.C.(2), “Applicable Law and Policy,” Statutes, Sponsor Assurances, and Relevant

Policies , on pages 7-8 in this Di rector’s Determination.]

Complainant argues it is similarly situated with Encore since both entities are fixed-base operators, yet Encore is permitted to opera te without complying with the minimum

standards while Asheville Jet must meet the st andards. [FAA Exhibit 1, Item 3, page 8.]

Respondents argue the two entities are not si milarly situated. Complainant is an established fixed-base operator; it manages faci lities that were constructed by the Airport Authority. [ See FAA Exhibit 1, Item 6, page 1.] En core is a new fixed-base operator required by its sublease to i nvest a substantial sum of money in ne w facilities on the Airport by March 31, 2009. [FAA Exhibit 1, Item 6, pages 9-10.]

Respondents state they granted Encore a te mporary waiver – which is allowed by the minimum standards at the Airport’s sole discretion – while Encore completes the construction of its fixed-base operator facil ities. [FAA Exhibit 1, Item 6, page 10.] The

22 This section does not define how long a “temporary” waiver may last.

23 Phase 1 construction is to be completed on or before March 31, 2009. [See FAA Exhibit 1, Item 6,

attachment E, page 3.]

Page 24FAA Atlanta Airports District Office confirmed in an August 30, 2007, letter that it is permissible to allow Encore to operate fr om temporary facilities while constructing permanent facilities. Given that Encore was under contract to construct the permanent facilities, the FAA concluded there was no in tent to circumvent the Airport minimum standards. [FAA Exhibit 1, Item 6, attachment H.]

Respondents argue that both Encore and Ashe ville Jet are subject to the same minimum standards, including the provision permitting waiv ers. [FAA Exhibit 1, Item 6, page 10.] Respondents point out that th e minimum standards in question were not promulgated until after Asheville Jet was already established on the Airport, so granting such a waiver at the time Asheville Jet was getting started was not even an issue. Respondents argue there is no evidence to suggest that Asheville Jet, or even a third fixed-base operator, would not be granted the same sort of waiver on request if it estab lished new or expanded operations on the same level. [FAA Exhibit 1, Item 6, page 10.]

Respondents cite two previous FAA determin ations to support their contention that

Asheville Jet and Encore need not be trea ted in the same fashion regarding airport minimum standards: (1) Rick Aviation, Inc. v. Peninsula Airport Commission , FAA Docket No. 16-05-18, (May 8, 2007) (Director’s Determination) and (November 6, 2007) (Final Decision and Order); and (2) The Aviation Center, Inc. v. City of Ann Arbor, Michigan , FAA Docket No. 16-05-01 (December 16, 2005) (Director’s Determination).

3⁄4 Rick Aviation

In Rick Aviation , the complainant alleged unfair ec onomic discrimination because the complainant was required to comply with the airport’s minimum standards while its competitor was not. Both tenants were fixed-base operators.

In that case, the airport sponsor did not waiv e the minimum standards. On the contrary, the airport sponsor began enforcing the mini mum standards within the competitor’s first months of operation. The fact that the co mpetitor may have fallen short of the minimum

standards was not evidence that the airport sponsor permitted this shortfall. In fact, the airport sponsor was working with both fi xed-base operators to bring them into compliance with the airport’s minimum sta ndards. The FAA concluded, “noncompliance by [the competitor] does not automatically result in noncompliance by [the airport sponsor].”

Respondents cite Rick Aviation in stating “...the FAA has r ecognized that differences in enforcement of an airport’s minimum standa rds are permissible a nd, in certain cases, appropriate.” [FAA Exhibit 1, Item 6, page 9.] This is not correct. While the FAA recognizes there may be exigent circumstances to consider from time to time, the FAA does expect airport sponsors to enforce minimum standards consistently. In Rick

Aviation , the airport sponsor was attempting to enforce the minimum standards in place.

The standards were not waived. In the curren t case, the standards permit a waiver, which would be applicable to any tenant under the same or similar circumstances.

Page 25Respondents cite Rick Aviation in stating, “The FAA deem s an airport operator in compliance with its grant assurances when th e operator has a program in place to address its grant obligations and it implements that program.” [FAA Exhibit 1, Item 6, page 9.]

In the context of the Director’s Determina tion, this statement referred to the airport sponsor’s efforts to enforce compliance. If, in fact, the airport sponsor is taking no steps to implement its minimum standards consiste ntly, the airport opera tor would likely be found in noncompliance. In the current case, Respondents are consis tently applying the Airport’s minimum standards in that the sta ndards themselves permit temporary waivers.

Respondents cite Rick Aviation in stating, “That standard of compliance ‘does not require that airport operators enforce minimum standards so rigidly as to require identical tone and posture toward all competitors that have different records and history with the sponsor.’” [FAA Exhibit 1, Item 6, page 9.] In that case, the F AA recognized that one fixed-base operator met the minimum standards through th e use of approved subcontractors performing fixed-base operator services on behalf of the parent company. The floor space occupied by the subcontra ctor counted toward the floor space requirement for the fixed-base operator. The complaining fixed-base operator did not use subcontractors for fixed-base operator services and was not permitted to count floor space from an unrelated subtenant that did not pe rform fixed-base operato r services. The FAA recognized that meeting the minimum standa rds could be accomplished directly by the fixed-base operator or th rough the use of approved subc ontractors, reflecting that minimum standards need not be so rigidly en forced as to require identical tone and posture toward all competitors that have diffe rent records and history with the sponsor.
[ See Rick Aviation, Inc. v. Pe ninsula Airport Commission , FAA Docket No. 16-05-18, (May 8, 2007) (Director’s Determination), page 16.] In the current case, the Complainant is the incumbent fixed-base operator. It m eets the minimum standards without regard to any waivers. The competitor is a new fixe d-base operator initiating service at the Airport. It is complying with the minimu m standards through the allowable waiver. Encore’s fixed-base operator sublease ag reement with the Respondents permits it to operate for a specified period of time from te mporary facilities while it constructs the facilities required for fixed-base operator s. [FAA Exhibit 1, Item 5, attachment 10, page 3.]

Respondents cite Rick Aviation in arguing that a new entrant fixed-base operator may be excused from meeting airport minimum st andards while its facilities are under construction. Respondents cite Rick Aviation stating, “The FAA noted that ‘considering that the Complainant admits that Mercury is proceeding with the construction of the terminal building, it appears that [the ai rport operator] has succeeded in compelling Mercury’s compliance with the 2004 Mercur y Lease.’” [FAA Exhibit 1, Item 6, page 10.] This citation is not re levant to the current case. In Rick Aviation , the requirement to construct a terminal building wa s contained the tenant’s lease, not in the

minimum standards. The Director’s Determin ation points out that FAA does not enforce lease agreements through the grant assuranc e compliance program. The issue regarding construction of the terminal building was not an issue for FAA to resolve. [ See Rick Aviation, Inc. v. Penins ula Airport Commission , FAA Docket No. 16-05-18, (May 8, 2007) (Director’s Determination), page 20.] Respondents are correct in noting, however,

Page 26that the airport sponsor may permit new entr ant tenants an appropr iate amount of time – based on the extent of investment and comple xity of the enterprise – to come into compliance with minimum standards.

3⁄4 The Aviation Center

Respondents cite The Aviation Center in stating, “The FAA ha s also recognized that a waiver of an airport’s minimum standard s, where such a waiver is not unjustly discriminatory, is permissible.” [FAA Exhibit 1, Item 6, page 10.]

In The Aviation Center , the complainant argued it was discriminated against when a competing fixed-base operator was permitted to operate without complying with the airport’s operational standards. In that case, the operationa l standards were adopted in 1981, but had never been made a mandatory re quirement for commercial aeronautical activity at the airport. In fact, neither the airport sponsor nor the complainant was even aware that the operational standards existed until a freedom of information request was conducted as part of the complaint process. As with the current case, the operational standards included a section permitting the airport sponsor to waive any provision it deemed in the public interest to waive. By not enforcing the standards, the sponsor deemed the standards to have been waived. [ See The Aviation Center, Inc. v. City of Ann Arbor, Michigan , FAA Docket No. 16-05-01 (December 16, 2005) (Director’s Determination), pages 5-6, 23.] The FAA found the airport sponsor enforced – or waived – the standards consistently among the fixed-base operators at the air port. As such, there was no basis for finding the sponsor in noncompliance with grant assurance 22,

Economic Nondiscrimination

.

In the current case, the Respondents did not waive the entire Airport minimum standards for every fixed-base operator on the Airport. In fact, th ey did not waive the minimum standards at all. They applied the mini mum standards as those standards permit – including allowing a temporary waiver. In this case, th e temporary waiver permits Encore to operate while constr ucting the facilities needed to comply with the Airport’s minimum standards for a fixed-base operator.

Director’s conclusion on grant assuran ce 22 related to Airport minimum standards Respondents have a set of Airport minimum standards. These standards allow the Respondents to waive the standards on a tem porary basis as appropriate in the sole discretion of the Respondents. Respondents ha ve deemed it appropriate to waive certain requirements during the initial period while the new entrant fi xed-base operator

constructs its facilities.

The established fixed-base operator and the new entrant fixed-base operator are not similarly situated for purposes of the Air port minimum standards until such time as both are fully established. In this case, Res pondents set a specific date (March 31, 2009) by which the new entrant is expected to be fully established. 24

24 Encore is a new fixed-base operator whose s ublease grants it a temporary waiver from certain

requirements of the minimum standards while it comple tes the construction of its fixed-base operator

Page 27The important factor to consider in determ ining compliance with the sponsor’s federal obligations on this issue is whether the same latitude is, or has been, provided to all

tenants under the same circumstances. This is th e first time this situation has arisen since the minimum standards were adopted in 2004. Th ere are no previous cases at this Airport for comparison. Respondents indicate they woul d provide a similar waiver in the future to the Complainant or another fixed-base ope rator should the need ar ise. They state, “there is no suggestion that Asheville Jet – or a hypothetical th ird FBO – would not likewise be given the same so rt of waiver if it request ed one occasioned by new or expanded operations at [the Ai rport].” [FAA Exhibit 1, Item 6, page 10.] Until such time as a comparable situation arises, neither the FAA nor the Complainant can predict how the Respondents will respond.

The FAA’s role in a Part 16 Complaint is to determine whether the Respondents are in current compliance with their federal obligations. [ See Section V.B, “Applicable Law and Policy,” FAA Airport Compliance Program , on pages 5-6 in this Dir ector’s Determination.] There is no evidence the Respondents are unjus tly discriminating against the Complainant by temporarily waiving certain minimum sta ndards during the new en trant’s construction phase. The minimum standards permit granting su ch temporary waivers. As such, there is

no violation of the minimum standards. In addition, it is not unreas onable to allow a new entrant fixed-base operator to begin certain operations from temporary facilities while it constructs its permanent facilities. Even so, En core has elected not to engage in fixed-base operator activities – including fuel sales – during phase 1 constructi on. Therefore, while the temporary waiver is permissible and not a violation of the Respondents’ federal obligations, granting the waiver has not yet di rectly impacted the Complainant. As of November 5, 2008, the Complainant remains the only fixed-base operator operating on the Airport.

The Director finds the Responde nts are not currently in viol ation of grant assurance 22,

Economic Nondiscrimination , by granting a temporary wa iver of certain Airport minimum standards for a specified period of time while the new entrant fixed-base operator constructs the required facilities.

Assurance 23, Exclusive Rights

Assurance 23, Exclusive Rights , prohibits the airport sponsor from giving any tenant the exclusive right to provide a partic ular aeronautical service. [ See Assurance 23 under Section V.C.(3), “Applicable Law and Policy,” Statutes, Sponsor Assurances, and

Relevant Policies , on page 9 in this Director’s Determination.]

facilities. Encore is required to invest $3.5 mil lion to complete the construction of those facilities by March 31, 2009, after which it will be required to co mply with the minimum standards. [FAA Exhibit 1, Item 6, page 10.] Even when the two fixed-base operators are deemed to be similarly situated with regard to the Airport minimum standards, they may stil l be regarded as not similarly situated in terms of grant assurance 22, Economic Nondiscrimination , since Encore is constructing its facilities at its own expense and making a substantial investment in the Airport while Asheville Jet is managing facilities constructed at the airport sponsor’s expense and is not making the same type of substantial investment in the Airport.

Page 28Complainant alleges the Respondents gave Enco re an exclusive right by permitting it to operate without complying with the minimum standards. [FAA Exhibit 1, Item 3, page 9.]

Complainant points to no service or product En core is exclusively permitted to offer or provide. Without this element, there can be no exclusive rights violation. In fact, by entering into an agreement with Encore to provide fixed-base operator services in competition with the Complainant, the Airpor t sponsors have actually avoided what could have been a potential violation of assuran ce 23. Had the Respondents refused to consider offers to establish a competing fixed-base operator when it was not unreasonably costly, burdensome, or impractical to have more th an one fixed-base operator, and it did not require reducing the space subleased to the ex isting fixed-base operator, they could have

been found in violation of their federa l obligations regard ing exclusive rights. 25

Director’s conclusion on grant assuran ce 23 related to Airport minimum standards The Director finds the Responde nts are not currently in viol ation of grant assurance 23, Exclusive Rights , by granting a temporary waiver of certain Airport minimum standards for a specified period of time while the new entrant fixed-base operator constructs the required facilities.

(2) Favorable Sublease Terms

Complainant alleges Respondents granted Enco re substantially favorable sublease terms that will result in unjust economic discriminatio n to the Complainant in violation of grant assurance 22, Economic Nondiscrimination . [FAA Exhibit 1, Item 3, page 11.]

Assurance 22, Economic Nondiscrimination , obligates airport sponsors to offer each fixed-base operator the same rates, fees, rentals, and other charges as are uniformly applicable to all other fixed-ba se operators making the same or similar uses of the airport and using the same or similar facilities. [ See Assurance 22 under Section V.C.(2), “Applicable Law and Policy,” Statutes, Sponsor Assurances , and Relevant Policies , on pages 7-8 in this Dir ector’s Determination.]

Complainant argues its competitor fixed-base operator, Encore, enjoys substantially favorable sublease terms that impede Ashev ille Jet’s ability to compete on an equal footing. [FAA Exhibit 1, Item 3, page 12.] For example,

• Encore pays a $.05 per gallon fuel flowage fee while Ashville Jet must pay 5% of gross receipts on fuel sales. Complain ant states this will result in a $.13 per gallon difference. Complainant argues su ch a difference will be devastating to

25 Complainant argues it lost the use of a previously available apron when the Respondents gave

preferential use of this apron to Encore. This do es not equate, however, to reducing the fixed-base operator’s subleased space to a degree that precludes it from competing with the second fixed-base operator or from requesting additional land upon which to construct replacement apron space. [ See

Issue 1 above.]

Page 29Asheville Jet. [FAA Exhibit 1, Item 3, page 12; and Item 6, attachment E, page 19.]

• Encore pays 5% of gross receipts on nonaeronautical serv ices and products, including rental cars, ground transpor tation, retail merchandise, and food and beverage sales. It excludes in-flight catering, vending machine sales, and all onairport aviation services and products, such as maintenance services, air charter services, flight training, hangar rentals, f acility and service f ees, and into-plane fees. [FAA Exhibit 1, Item 5, attachment 10, page 19; and Item 6, attachment E, page 19.]

• Ashville Jet must pay 5% of all gross receipts (not ju st on nonaeronautical receipts). Complainant states “... requiri ng Asheville Jet to pa y Airport Authority 5% of all gross receipts while allowing Encore to pay only 5% on minor ancillary revenue sources will give Encore substant ial cost savings that will allow it to obtain further competitive and pricing advantages with higher profits.” [FAA Exhibit 1, Item 3, page 13.]

Table 1 below gives a general comparison of the differing terms between the Asheville

Jet sublease and the Encore sublease.

Table 1: Comparison of Sublease Terms

Sublease Term Asheville Jet (Complainant) Encore (competitor) Reference

Sublease executed 1993 2007 FAA Exhibit 1, Item 6, page 11.

Subleased area 33.67 acres 9 acres FAA Exhibit 1, Item 6, page 12. Fuel flowage fees 5% of gross receipts

on fuel sales $.05 per gallon FAA Exhibit 1, Item 3, page 12

Gross receipts 5% of all gross receipts 5% of gross receipts

for nonaviation products and

services FAA Exhibit 1, Item 3, page 14; Item 6, page 12.

Unimproved land rent N/A $.25 per square foot FAA Exhibit 1, Item 5, attachment 10, page 5. Preferential use apron N/A $.30 per square foot FAA Exhibit 1, Item 5, attachment 10, page 5. Option provision for additional unimproved

land None $.025 per square foot; right of first

refusal on 8 acres. FAA Exhibit 1, Item 5, attachment 10, page 5; Item 6, page 12.

Base sublease term and investment requirement 24 years; Authority

constructed facilities 30 years with $3.5

million investment FAA Exhibit 1, Item6, pages 11, 15.

Sublease extension option

and investment requirement 1 year for each $135,000; rental rate

reverts to fair

market value. 10 years with $4.5

million investment FAA Exhibit 1, Item 6, page 11.

Page 30These two subleases were negotiated 14 years ap art. It is reasonable to expect there

would be some differences in the terms. Th e Director has consiste ntly concluded that grant assurance 22, Economic Nondiscrimination , does not require a sponsor to offer

lease rates and terms that are identical to ot her leases negotiated at different points in time. The FAA does not require a sponsor to maintain equal lease rates over time between competing fixed-base operators. [ See Aerodynamics of Reading, Inc. v Reading Regional Airport Authority , FAA Docket No. 16-00-03 (July 23, 2001) (Final Agency Decision).]

Further, two fixed-base operato rs may be considered not esse ntially similar as to rates and charges – even though they offer the same services to the public – when there is a difference in space, location, or facilities. [ See FAA Order 5190.6A, Airport Compliance Requirements , October 2, 1989, chapter 4, secti on 4-14d(2)(a,b).] Even when aeronautical tenants propose the sa me or similar use of the airpor t, if the level of financial investment is dissimilar, the FAA may find the aeronautical users are not similarly

situated.

In this case, Asheville Jet entered into a sublease agreement to manage facilities constructed and paid for by the Respondents. In contrast, Encore entered into an agreement to construct and pay for its own facilities. Encore committed to making a substantial financial investment in the Airpor t that was not made by Asheville Jet. As such, the two fixed-base operato rs are not similarly situated.

Complainant has more than three times the la nd area as Encore yet pays no rental rate directly on the property. Instead, Complainant pa ys five percent (5%) of gross receipts as its rental payment. Encore, on the other hand, pa ys a land rental rate that will be adjusted annually by the Consumer Price Index and ev ery five years by appraisal. [FAA Exhibit 1, Item 6, page 12.] Encore also pays five cents ($.05) per gallon for a fuel flowage fee. The fuel flowage fee for Ashevi lle Jet is included in the five percent of gross receipts. These terms are admittedly different.

The Director finds the differing terms between the Asheville Jet sublease and the Encore sublease are justified, howeve r, by the differing circumstances and the investment requirements of each fixed-base operator. Th e differing terms are not so disparate as to result in a violation of the Respondents’ federal obligations unde r grant assurance 22,

Economic Nondiscrimination . In August 2007, the FAA Atlant a Airports District Office reviewed the Encore sublease at the airport sponsor’s request and also concluded that

while the Encore sublease and Asheville Jet sublease were not exactly the same, they were equitable, fair, and r easonable. [FAA Exhibit 1, Item 6, attachment H.]

Even so, Respondents state, “The Authority has repeatedly offered to renegotiate the terms of Asheville Jet’s [fixed- base operator] sublease to address the issues that are the subject of [this] Part 16 Complaint.” [FAA Exhibit 1, Item 6, page 5. See also Item 5, attachment 9, page 17.] The Asheville Jet sublease includes a provision for renegotiating

the terms of the sublease at the Complainant’s request subject to providing substantial

Page 31additional capital investment. 26 [FAA Exhibit 1, Item 5, attachment 3, page 6.] In addition, Respondents argue, “the Authority would be willing to offer those comparable sublease terms to Asheville Jet.” [FAA Exhi bit 1, Item 6, page 14.] The Complainant stated at a regular meeting of the Asheville Regional Air port Authority on October 12, 2007, that it would like to renegotiate its leas e terms “to become comparable to other tenant leases.” The Complain ant did not elaborate on what changes might be requested. [FAA Exhibit 1, Item 5, attachment 11.]

Complainant’s sublease contains the follo wing general provision: “Lessor shall not require a greater level of serv ice or performance from Lessee than that which is required from any other occupant of the Airport provid ing some or all of the Commercial Aviation Activities (‘competitor’), nor shall Lessor grant terms more favorable than those contained in this Lease to any other competitor. It is the intention of the parties that no competitor, whether presently occupying the Airport or occupying the Airport hereafter, have an unfair advantage by paying a lesser re ntal than Lessee or being provided with terms or treatment which are directly more favorable to Competitor than those provided to or required of Lessee.” [FAA Exhi bit 1, Item 5, attachment 3, page 11.]

If it is the Complainant’s intent to argue that this term in its sublease has been breached by the Respondents’ sublease with Encore, Comp lainant must pursue that issue in state court. 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 cont racts between an air port sponsor and the federal government. [ See AmAv v. Maryland Aviation Administration , FAA Docket No. 16-05-12, (March 20, 2006) (Director’s Determin ation).] Whether or not an airport tenant has breached the terms of its lease agreem ent with the airport s ponsor is a matter to

be resolved in state court. The FAA is not a party to litigation proceedings between complainants and respondents involving c ontract disputes; nor does the FAA have jurisdiction over matters of contract law between air port tenants and sponsors. [ See Rick Aviation, Inc. v. Penins ula Airport Commission , FAA Docket No. 16-05-18, (November 6, 2007) (Final Decision and Order).]

Director’s conclusion on favorable sublease terms The Director finds the Responde nts are not currently in viol ation of grant assurance 22,

Economic Nondiscrimination , as a result of offering different terms for a sublease requiring a substantial investment in the Air port as compared to a sublease that did not require a similar substantial investment.

Director’s Conclusion on Issue 2

The Director finds the Responde nts are not currently in viol ation of grant assurance 22,

Economic Nondiscrimination , or grant assurance 23, Exclusive Rights, by (1) by requiring

26 The sublease states, “If Lessee requests and shall be willing to provide substantial additional capital

investment, the Parties agree that they will negotiate in good faith the terms of this Lease which term would bear a relation to the amount of additional capital investment proposed, taking into consideration the amount of time remaining under this Lease.” [FAA Exhibit 1, Item 5, attachment 3, page 6.]

Page 32the Complainant to comply with the Airpor t minimum standards while not requiring the competing fixed-base operator to comply w ith the same standards, or (2) by granting substantially favorable subl ease terms to the competing fixed-base operator.

• It is both reasonable and permitted by th e Airport minimum standards to allow a temporary waiver for a new entrant fi xed-base operator during a period of

construction.

• In addition, the Respondents’ federal ob ligations do not require it to offer identical lease terms to fixed-base operator s that enter into agreements at different

times and on different bases. In this case, the new entrant agreed to make a substantial investment in the Airport th at was not made by the incumbent fixedbase operator. As such, the two are not similarly situated for purposes of rates and fees under grant assurance 22. 27

VII. FINDINGS and CONCLUSIONS

Upon consideration of the submissions and re sponses by the parties, the entire record herein, applicable law and po licy, and for the reasons stated above, the Director of the FAA Office of Airport Complian ce and Field Operations finds and concludes as follows:

• The Director finds the Respondents are not currently in violation of grant assurance 5, Preserving Rights and Powers, grant assurance 22, Economic

Nondiscrimination , grant assurance 23, Exclusive Rights , or grant assurance 27, Use by Government Aircraft , by granting preferential us e of an apron upon which federal funds were expended to a competing fixed-base operator.

• The Director finds the Respondents are not currently in violation of grant assurance 22, Economic Nondiscrimination , or grant assurance 23, Exclusive Rights, by (1) by requiring the Complainant to comply with the Airport minimum standards while granting a temporary wa iver from those standards to a new entrant competing fixed-base operator dur ing a period of construction, or (2) by granting different sublease terms to a competing fixed-base operator making a substantial investment in the Airport that is not made by the Complainant.

ORDER

Accordingly, it is ordered that:

1. The Complaint is dismissed.

2. All Motions not expressly granted in this determination are denied.

27 Once both fixed-base operators are fully functioning with permanent facilities, they will be deemed to be

similarly situated for the purpose of complying with the Airport minimum standards for fixed-base operators only. For purposes of comparing sublease term s, they will continue to be not similarly situated.

Page 33RIGHT OF APPEAL

This Director's Determination is an initial agency determination and does not constitute a final agency action and order subject to ju dicial review. [14 CF R 16.247(b)(2)] A party to this Complaint adversely affected by the Director's Determination may appeal the initial determination to the FAA Associate Administrator for Airports pursuant to 14 CFR 16.33(b) within thirty (30) days after se rvice of the Director's Determination.

October 1, 2009

Randall S. Fiertz Date Director, Office of Airport Compliance and Field Operations

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