This can't possibly be legal - advice?

[SkyHog]

A friend of mine and I have been brainstorming ideas for starting a business for the last few weeks or so. We have run the gammut of ideas and finally, today came up with one that sounds like it could work:

Some background: There are two FBOs at Double Eagle Airport, West Mesa Aviation, and Bode Aviation. West Mesa Aviation is about to go out of business because of some stupid business moves and some shady practices that scared people away. Bode is in the process of buying West Mesa Aviation. West Mesa Aviation has a small pilot shop in which they sell a very small amount of product recieved from a local pilot shop in Albuquerque, located no where near the airport.

I have talked to the owner of the pilot shop a few times, and he says business is strong. Our idea was to lease a chunk of land at Double Eagle Airport and start a pilot shop there. I called around and after being transferred about 5 times, finally spoke to the person who is in charge of business development at Double Eagle.

He explained that there are two FBOs at Double Eagle, and while neither one directly runs a pilot shop, they could start one at any time, and therefore an agreement with the city and the FAA states that they cannot let a competing business start there, as it would drain from a possibly untapped business source that the FBOs could be involved with.

This can't be legal, can it? Can the city deny access to public property because it may interfere with a business that has not started yet? Please, I need advice. Anyone?

edit: I should point out - Double Eagle II Airport is owned and operated by the Albuquerque International Sunport and the City of Albuquerque. It is not a private entity.

 

[markb5900]

Actually yes Nick.
Most FBO's have some sort of "contract" with the city or who ever owns the airport. Around here most of those contracts include that they must do certain things, like provide flight training, sell fuel etc..
For those "must do" things many of them then get EXCLUSIVE rights to the business on that field, to include pilot shop if they so desire.
You may want to talk with the FBO and see if they would give you a waiver/permission to open up the pilot shop. They may even appreciate someone doing it so they don't have to mess with it.

 

[wsuffa]

Non-compete contracts are common in governmental contracts, you'd have to see the language of the specific contract to determine whether it would prohibit you.

As for being 'legal', there is some precedent from the FAA that prohibits them from discriminating against other parties that want to operate at the airport. This may not apply if there was no federal grant money. It would be legal for them to make you operate under the same rules and regs as a similarly situated company (liability insurance, etc.).

You'll want to consult with an experienced FAA attorney who knows the right places to get to in the agency.

 

[Graueradler]

Well, I'm confused. I just attended an FA seminar last week. One o fthe break out sessions was on compliance. Excerpted from overheads:

"Several compliance obligations are common to all grant agreements and property conveyence documents."

and

"EXCLUSIVE RIGHTS

-No special privilege or monoply to engage in aeronautical activity

-Obligtion continues as long as the airport is an airport"

So how can airport sponsors who have acepted federal grants enter into "no competition" agreements?

All of the handouts/overheads from the seminar are available on the FAA Southwest region website. I'll post the link later if I find it.

Here is a link with infor about the seminar but the handouts don't seem to be posted yet. They were supposed to be on-line by this last Monday.

http://www.faa.gov/airports_airtraffic/airports/regional_guidance/southwest/airports_news_events/asw_conference/2006march/

Here is some text from an AC on Exclusive Rights

1-1. ASSURANCE AGAINST EXCLUSIVE
RIGHTS. The FAA has determined that most
exclusive rights agreements violate the assurances
contained in grant agreements. With few exceptions,
an airport sponsor is prohibited from granting
an exclusive right to a single operator for the provision
of an aeronautical activity to the exclusion of
others (see definition of exclusive right). Accordingly,
FAA policy prohibits the creation or continuance
of exclusive rights agreements at obligated
airports where the airport sponsor has received
Federal airport development assistance for the airport
’s improvement or development. This prohibition
applies regardless of how the exclusive right
was created, whether by express agreement or the
imposition of unreasonable minimum standards
and/or requirements (inadvertent or otherwise).

And a link to the entire AC

http://www.faa.gov/airports_airtraffic/airports/resources/advisory_circulars/media/150-5190-5/150_5190_5_chg1.pdf

 

[Len Lanetti]

Note that if you want to own a pilot shop there is an online pilot shop listed for sale in a recent edition of Trade a Plane.

Len