Part Three of the Four-Part Crafting Advantageous Hangar, Office and Tie-Down Agreements Series
By John L. Enticknap and Ron R. Jackson, Principals, Aviation Business Strategies Group
In our previous blog, we wrote about developing a favorable office lease agreement as the second post for our series about crafting advantageous hangar, office and tie-down agreements, which together are the third component of the six intangibles that can build equity in your FBO.
In this post, we discuss creating a tie-down agreement that can turn often overlooked space into some the best ground at your FBO location.
Your aircraft tie-down ramp should be viewed as a viable leasing area that has the capability of creating a consistent revenue stream, whether it’s a month-to-month lease with base tenants or an RON situation with a transient customer.
Here are a few tips to keep in mind when developing a tie-down agreement:
- Don’t give it away. Put a true value on the tie-down space and stick to it.
- Just like hangar queens, be wary of aircraft owners who fly their aircraft infrequently. We’ve seen tie-down areas at some FBOs that are full of aircraft with flat tires and parts missing. Chances are these customers are not paying their tie-down fees on a regular basis and not buying fuel.
- Keep the tie-down areas up to snuff. Attracting and keeping tie-down tenants requires a ramp that is attractive and well kept. That also means replacing the tie-down ropes on a regular basis.
- It’s important to keep in mind that, like hangar agreements, FBOs should not devalue the true worth of tie-down space based on promised potential fuel sales. Work with the tenant to determine monthly fuel sales potential, spell out specific fuel sales goals in the lease, and revisit these amounts frequently. Include language that escalates tie-down rates if consistent fuel sales goals are not met.
- All aircraft that tie down on your ramp should have an agreement. This protects you and the tenant in case of insurance claims by establishing the terms of the tie-down agreement.
- As part of your agreement, make sure you establish the rules, such as prohibition of derelict aircraft, flat tires and aircraft maintenance conducted in the tie-down area.
- Tie-down agreements are usually simple contracts and for the short term. You can make them month-to-month and evergreen, meaning they renew automatically. Also, you can make provisions to terminate the agreement upon a 30-day notice. This gives you flexibility in running your business.
Tie-down lease agreements are a sublease just like hangar and office lease agreements, They must conform to the master lease agreement between your FBO and the airport authority. Signatories to tie-down subleases have a right to know the contents of your master lease because they must also comply with its contents. In addition, terms for rate increases in your subleases should be similar to the master lease, and the term of subleases cannot be longer than the master lease term.
There are many factors and nuances to crafting an advantageous office lease agreement that we will not be able to cover in the blog. Therefore, we encourage you to attend one of our FBO Success Seminars where we spend additional time discussing these important topics as well as others.
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About the bloggers:
John Enticknap has more than 35 years of aviation fueling and FBO services industry experience. Ron Jackson is co-founder of Aviation Business Strategies Group and president of The Jackson Group, a PR agency specializing in FBO marketing and customer service training. Visit the biography page or absggroup.com for more background.
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