"NC airport works to fend off FBO merger"

["Stephen Irwin" <stepheni@xxxxxxxxxxxxxxxxxxxxxx>]

Friday, February 23, 2007

Airport works to fend off FBO merger
The Raleigh (NC) Triangle Business Journal


MORRISVILLE - Raleigh-Durham International Airport Director John Brantley,
with the backing of his board, is working to thwart the merger of the two
companies that service private aircraft at the airport - citing the need for
competition. 

Brantley says representatives of Landmark Aviation and Southern Jet, known
as fixed base operators, or FBOs, had inquired about the willingness of the
airport to approve the assignment of one of the FBO leases to the other FBO
tenant - resulting in a single FBO tenant.
 
The airport's response was loud and clear. 

"Don't come over here with a request to get together with your next door
neighbor," says Brantley. "We want to see multiple folks providing service
here." 

The RDU Airport Authority made its statement Feb. 15 by approving a
resolution stating that the airport would oppose any attempt to consolidate
the companies into one. FBOs are private businesses that provide services
such as fueling, hangar space and maintenance to corporate jets and other
non-commercial airplanes. 

Each lease is for 20 years, and more than 15 years remain on each, says the
airport authority's resolution. 

RDU has the teeth to back up the resolution, says RDU attorney Jim Tatum. He
says there's language in the FBOs' leases that prevents them from assigning,
subletting or transferring leases to another company without the airport's
permission. 

Why does the airport care if two private businesses merge? The authority
wants to promote competition and is encouraged to do so by the Federal
Aviation Administration, says Tatum. 

Asked about the airport's ability to squelch such a merger using provisions
in its leases, Duke University law professor Barak Richman says, "I can't
think of a reason why that lease would not be enforceable." Richman, who
teaches contract and antitrust law, has not seen the leases and points out
that he would need to do so to be more confident in his assessment. 

Brantley says that Landmark Aviation, known as Piedmont Hawthorne Aviation
prior to a 2004 merger, has been interested in acquiring competing FBOs for
years. "There's always a propensity if you're a big guy to swallow the
little one," he says. 

Tempe, Ariz.-based Landmark has 29 FBO operations around the country, while
Southern Jet's sole location is at RDU. 

Asked about a potential acquisition and the airport's resolution, Landmark
spokeswoman Cathy Gedvilas says the company is always looking at growth
opportunities to expand its network and customer reach. But she adds that
nothing is in the works with Southern Jet right now. 

"Landmark Aviation is not currently contracted or in discussions with
Southern Jet, and we do not comment on the actions of governmental
entities," she says. 

Dr. Tom Melin, a Wilmington neurosurgeon who is Southern Jet's majority
owner, did not return repeated messages seeking comment. 

Asked about the prospects of Southern Jet being sold to Landmark, Southern
Jet Vice President of Operations Adam Elkins says, "I am not aware that it's
up for sale." Elkins deflected other questions about Southern Jet and the
authority's resolution, saying, "I really don't want to be quoted as saying
anything." 

Elkins is new to the job. He was hired in mid-October to replace former
executive Sandy Lockhart. Dave Tresaloni, who had been Southern Jet's
general manager for years, also left in November. Tresaloni did not return a
phone message.

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