Saker Aviation Challenges FBO Lease Award at Pennsylvania Airport

AINonline
August 22, 2013, 8:59 AM

FBO operator Saker Aviation Services has filed a lawsuit against its landlords at Wilkes-Barre Scranton International Airport (AVP) claiming they violated its contract when they failed to renew its lease and awarded a 15-year lease on the property to another service provider.

Saker acquired existing FBO operator Tech Aviation Services in 2005 and inherited the remainder of its 10-year lease at the airport, which expired at the end of last month. Saker interpreted the contract as giving it the right to extend its lease by two five-year periods if the terms were acceptable to both parties. The agreement also stated that “no land or facilities at the airport will be offered for fixed base operations to third parties without first offering such land or facility to lessee on the same terms or conditions as offered to third parties.” The document went on to state “Tenant will have ninety (90) days to accept or reject said offer, after which time, in the case of tenant rejection of said offer, the airport may proceed with negotiations.”

On July 18 the airport board voted to award the contract for the lone FBO on the field to Aviation Technologies. Saker, which uses the location as its company headquarters, filed suit against Luzerne and Lackawanna Counties as well as their jointly owned and operated airport board, seeking a restraining order against the move. The two sides began negotiations for the lease renewal last October, with the “understanding that Saker was not to be a mere ‘stalking horse’ used [by the airport] to solicit a third-party offer.”

In February, publicly owned Saker–which also operates FBOs at Garden City Regional Airport in Kansas, and New York City’s Downtown Manhattan Heliport–gave a presentation to airport authorities outlining its proposed improvements at the site. These improvements included renovating the terminal’s customer service area and pilot lounge, installing new entry awnings, a new sump pump recovery system, an internal security camera system and the upgrading of the hangar’s heating, ventilation and air conditioning.

Saker then responded to a request from the airport for a five-year lease proposal, which included a $150,000 investment commitment from the company in its facilities. Several weeks later, in a letter from the airport director, Saker was informed that the board was “evaluating all available options for the near-term future of the FBO.”

Shortly thereafter, the airport issued an RFP for the site, listing the improvements offered by Saker as a starting point. Saker, which claims it has spent approximately $1 million in improvements on the location during the course of its lease, again submitted a proposal. According to Saker, the airport awarded the contract to Aviation Technologies without Saker’s ever being informed of the specifics of the competing offer or being given the opportunity to match it.

An airport spokesperson had no comment on the current litigation, but according to local newspaper The Times Leader, AVP executive director Barry Centini testified that federal law prohibits the airport from offering a company exclusive rights to operate there, and that Saker’s assurance of the right of first refusal dealt only within the initial 10-year lease and only if the airport wanted to bring in an additional service provider. While Centini told the court that the airport would need to close on September 1 if no FBO was in place, Saker president and CEO Ronald Ricciardi stated that his company was “ready, willing and able” to continue operating at the airport until the dispute is settled.

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