Additional FBO at Montrose Regional Airport?

05/07/14 | By | 241 views More

Editor:

The Montrose County Board of Commissioners is currently deliberating the addition of a second Fixed Base Operator at the Montrose Regional Airport.  Having experience in this business as well as others and having no ties to the aviation industry I offer the following insight.

I fully support healthy competition as the path for achieving the best free market results. Given all other things being equal, airport customers should benefit from the healthy competition brought by a second FBO; however, this statement assumes one very important fact, that the existing volume of business available at Montrose Regional Airport, can economically support a second operator. From my observations, this assumption is very likely not the case.

If indeed the economics are insufficient to support an additional FBO one of the following scenarios will likely be the result.

Scenario 1: One of the FBOs will go bankrupt.

Scenario 2: The two FBOs will merge.

Scenario 3: A protracted competition will ensue with fuel pricing being the only differentiating factor. This will likely result in a poor customer experience and a tarnished reputation of the FBOs and Montrose Regional Airport as a whole.

There are any number of justifications for this conclusion but the most relevant is very simple, size of market. Assuming the existing FBO is a good operator providing the services demanded by its customers, an additional FBO will not increase aviation traffic or revenue.  An FBO is totally dependant upon the locale of the airport to increase the number of customers.  Not unlike a new real estate company entering a market, the new entity does not create more business it simply splits the existing market into smaller pieces. Couple this fact with the large upfront capital investment inherent in an FBO enterprise and you have the perfect conditions for the scenarios listed above.

Given the preceding understanding of the risks, the prudent man would be hard pressed to decide in favor of an addition FBO.

 Cordially,

Joe Bayless, Ouray County

Share on StumbleUponDigg thisPin on PinterestShare on RedditShare on LinkedInShare on TumblrShare on Google+Tweet about this on TwitterShare on FacebookEmail this to someonePrint this page

Tags: , , , , , , , ,

Category: Letters to the Editor

Leave a Reply

You must be logged in to post a comment.