An aviation industry executive has come out against the concept of adding a second private jet facility to Aspen/Pitkin County Airport, although the plan to build one seems to be headed for reality anyway.
Lou Pepper, CEO of Atlantic Aviation, which runs the current “fixed-base operator” at the Aspen airport, said it’s a mistake to consider a second one, as has been suggested to Pitkin County officials.
A consultant to Aspen airport officials recently made the case for a second FBO to the Pitkin County commissioners, calculating that an additional facility could pay the county some $3.2 million in rent. (See related story, “Fuel sales could boost airport revenues.”)
Airport officials seem to agree with Stephen Horton’s argument, which is based on a comparison of fuel sales in Aspen and at a planned new private facility at San Diego International Airport.
Horton, of Leibowitz and Horton Airport Management Consultants, pointed to Landmark Aviation’s winning bid to build a replacement FBO at San Diego, which includes paying $5.2 million in annual rent over a 37-year lease.
Despite the fact that San Diego is a much larger airport, Aspen has more private fuel sales — 3.3 million gallons per year compared to 3 million gallons in San Diego — and therefore the local market could accommodate a second private aviation facility, Horton argued.
But the comparison of a large, urban airport with one FBO to a seasonally driven resort with two potential facilities is “foolish,” said Pepper.
“San Diego is a sole provider, getting all of the business at a major airport,” Pepper said. “It is a much less seasonal airport than Aspen and has consistent corporate activity.”
Pepper denied that he was just speaking out to protect his vested business interest.
“This is not self-serving,” he said. “This is not comfortable for us. But this is not the right thing to do for the Aspen airport.”
It’s Aspen’s seasonality that skews the comparison, explained Pepper.
“Aspen is the airport most suited for a sole provider of any that I know of,” he said. “Aspen is our most seasonal base and we have 65 bases.”
Pepper said it takes 40 well-trained people to run the Aspen FBO and its fleet of fueling trucks during peak periods, and those employees are not laid off during the slow months.
“We are carrying people all year long,” Pepper said. “You need an entity in Aspen that can sustain those down times. If you start splitting up the pie, you are not going to have that situation.”
Market demand
Jim Elwood, director of aviation at the Aspen/Pitkin County Airport, said many FBO operators have expressed a great deal of interest in operating a second private facility at Sardy Field.
“These are companies that are very up on FBO business models and they know what they are talking about before they go into something,” Elwood said.
Aspen’s draft airport master plan, which is currently in the public review process, states that airport managers “receive 10 to 20 inquiries per year regarding the desire to lease or build corporate hangar facilities at the airport.”
And representatives from several FBO companies have been actively participating in the master planning process.
But Pepper says that it is FBO operators, not FBO customers, that want a second facility in Aspen.
“They are misconstruing the actual market pressure,” Pepper said. “I know there is no market pressure.”
Airport officials are also assuming that private flights will trend upward in the near future, despite a recent downward trend.
In 2011, there were 19,171 general aviation takeoffs and landings at the Pitkin County airport, down from 25,302 in 2006. But the master plan forecasts 30,333 such operations in 2017.
The Federal Aviation Administration tends to see the FBO situation the same way Elwood does.
“If there isn’t market viability, typically we don’t see demand,” John Bauer, manager of the FAA’s Northwest Mountain Region, told the Pitkin County commissioners in May.
There was certainly market demand in San Diego.
Landmark’s lease there was set to expire in April 2012 and the airport’s master plan had approved an expansion of the FBO’s footprint from just under 10 acres to 12.4 acres. So San Diego airport officials put out a two-tier request for bids for a new FBO.
Landmark won a competitive bidding process to build and operate the new facility, pledging $39 million toward a new terminal and other facilities as well as $315 million in rent over 37 years. Atlantic, the other top bidder, also pledged $39 million for facilities, but offered a much lower rent.
San Diego didn’t have the option of adding a second FBO because the current master plan—and the available space at the airport only allow for one.
But that’s not the case in Aspen.
Second FBO may be inevitable
Because of a combination of FAA regulations, the county’s master planning process, and interest by other FBO operators eager for a share of the Aspen market, it appears increasingly likely that there could be a second FBO in Aspen.
The FAA’s Bauer advised the Pitkin County commissioners in May that if an FBO operator expresses interest, FAA regulations require that a local airport accommodate the request — if the airport has accepted prior federal funding, if there is space available at the airport, and if it makes financial sense.
The current master plan indicates that there is enough room to build a second FBO, on land that was purchased with FAA funds.
The facilities, accessed from Owl Creek Road, would be just downvalley of the existing airport operations center building and adjoining hangar.
The master plan shows a 5,000-square-foot terminal, a 14,400-square-foot aircraft hangar area (some versions of the plan show up to four large aircraft hangars), a 5,000-square-foot maintenance hangar, a 280,000-square-foot aircraft parking ramp, an aircraft parking area for at least 30 planes, a 60-car parking lot, four fuel tanks to store 70,000 gallons of fuel, and an emergency helicopter landing zone.
The master plan also estimates there will be $24 million in private-sector financing for a new west-side FBO in the next five years, and another $22 million from private sources will come forth for improvements to the east-side FBO area by 2031. Elwood and airport consultants have also suggested that FAA funding would likely be available for a new taxiway on the west side.
So the criteria for a new private jet facility seem to have been met. But what if Pepper is right, that the seasonal nature of the Aspen market would mean that two FBOs would suffer, when one alone would thrive?
The Pitkin County commissioners, through the current master planning process, do have the ability to define the scope and scale of a new FBO, as well as to issue a detailed request for proposals that can narrowly define the facility. But under FAA regulations they don’t have the ability to simply say “no” to a valid proposal in order to remain a one-FBO airport.
“You have the control to develop your airport how you want to develop it, as long as you’re not precluding somebody for an unjust reason,” Bauer told the county commissioners in May.
Bauer further explained how the FAA would view an objection from the county to add an FBO based on economics.
“All we can go off of is historically what we have seen achieved at other airports of similar size or similar use, similar fuel flowage,” Bauer said. “If you were pressed with that, it would be the community’s responsibility to get back with the FAA, provide a detailed analysis of why it wouldn’t be economically feasible for an additional FBO, and show us.”
Bauer even told the commissioners that it’s the FAA’s opinion that Aspen “may be able to handle” a third FBO.
“We’ve seen three FBOs at facilities that have significantly less fuel flowage than you have here,” he said.
In August, the county commissioners endorsed the current draft of the airport master plan— which includes two FBOs — and sent it to the county planning and zoning commission for review.
The P&Z will begin reviewing the master plan September 25. After the P&Z review, the commissioners are expected to pass a final plan later this fall.
Editor’s note: This story was produced in collaboration with Aspen Business Journal, which also published it on Monday, Sept. 24, 2012.