The Jackson Hole Airport in Wyoming will buy the assets of its private fixed-base operator for $26 million after the airport’s governing board unanimously approved the deal on Nov. 1.
The board, pressed by AOPA and other organizations to open the airport to competition after FBO customers complained about high prices, took the action, setting aside another option it had considered earlier this year to allow a second FBO to operate on the field. The company seeking to become the second FBO objected to the decision and issued a statement protesting a lack of public input.
The airport will acquire all the assets of Jackson Hole Aviation, “including trucks, equipment, furnishings etc.,” Elwood said.
The financing plan must be approved by Teton County as a budget amendment, Elwood said, noting that the airport’s current debt load is an “incredibly modest” $4 million divided among several debt instruments including a revenue bond and loans being serviced at an average interest rate of 2.55 percent.
“Otherwise the airport board is a stand-alone entity,” he said.
In an email to AOPA, Elwood discussed how officials weighed whether to buy the FBO now or wait until the company’s lease expires, at which time the airport would take over the assets at no cost.
“The current FBO has a right to operate a FBO on the airport for another five years, until April, 2023. Under the scenario of the airport purchasing the business now, the airport is expected to more than recover its acquisition costs during that five-years, and aeronautical users are expected to benefit by expedited (1) investment in facilities and services that will benefit all GA operators, and (2) opportunity for adjustment to a friendlier GA operation,” he wrote.
In August, the board voted to delay action on a previous decision to seek proposals for a second FBO in a bid to resolve complaints from airport users about reported egregious pricing by Jackson Hole Aviation. The airport had been approached by Wyoming Jet Center with an expression of interest in becoming the airport’s second FBO.
In a statement issued Nov. 2, Greg Herrick, CEO of Wyoming Jet Center, criticized the airport board’s new course of action. “To commit the public to spend $26,000,000 or more to purchase the existing FBO monopoly simply to maintain a monopoly to be run by the government is not in the public’s best interest,” he said. “In addition, contrary to comments made by some who do not favor competition at the airport, two FBOs will only enhance safety, service and efficiency. As well two FBOs can provide the same or greater operating revenue through fees on FBO sales without investing any public funds what-so-ever.”
Herrick protested a lack of opportunity for the public to comment on the proposal—a point disputed by Elwood.
“No, there was a designated public comment time. That is a false statement as several people spoke,” he said.
Other airports around the country have been taking steps to correct anticompetitive business conditions after AOPA responded to member complaints with an energetic campaign to take on egregious FBO pricing. The association pointed out to the Wyoming airport’s operator that its acceptance of federal funds prohibited granting exclusive operating rights to any one FBO.
Although many FBOs charge fairly for their services, as required by federal grant obligations agreed to by the airport sponsor, AOPA recognizes the need to work with the industry, regulators, and community leaders to ensure that public airports live up to that standard because unfair pricing practices and cost-prohibitive airport access can severely affect all aspects of GA.
The Jackson Hole FBO had earned a notable number of customer complaints, according to AOPA’s yearlong inquiry into egregious prices—even subjecting the business to satire in local news media.
In one complaint, a pilot reported being charged a $260 fee for a quick turnaround with “hardly any service.”
Elwood said the pricing of FBO services after next May would be independent of the purchase price and its financing mechanism.
“The intent of the airport board is to offer the highest level of customer service and value of pricing of services,” he said. “We want to treat every airplane with the highest regard, whether it is a light single or larger. That is our objective in moving forward.”
Other revenue-producing lines of business for the airport—which is the only commercial service airport within a national park, he noted—include security functions administered under contract to the Transportation Security Administration.
The story has been a local headline-maker outside of the aviation community. Reporting on the Nov. 1 vote by the five-member board of directors, a local newspaper quoted board member Jerry Blann as saying that the action, which takes effect May 1, 2018, was “the biggest decision that this board has made in a really long time.”
Blann added that the vote, based on a consultant’s recommendation, was in the airport’s best interest even though he favored a solution geared toward business competition.
Elwood, however, noted feedback from board members during the “quite extensive” discussions suggesting that a driving focus for the board’s decision was the ability “to have a direct influence on what that customer service would look like” at an airport-administered FBO.
“An important message to get out is that we value and welcome aircraft of all sizes and circumstances,” he said.