FBO executives are seeing a need to add millions of square feet of ramp and hangar space as they attempt to accommodate the growth in business aviation fleets and aircraft size, but are facing rising costs of construction, more complicated airspace restrictions, and limits in available property. Speaking during NATA’s 2018 Aviation Leadership Conference last week, NATA president Gary Dempsey pointed to a study by the Business Aviation Group that estimated a need for about 24 million square feet in hangar and ramp space in the U.S. through 2023 and double that worldwide in infrastructure requirements, when considering the existing fleet and what is anticipated for delivery.

This underscores the importance of FBO executives strengthening their relationships with airport managers and reaching agreements on as long a lease as possible, Dempsey said. Thirty years is a preferred term and more airports are recognizing the benefits of that, he added.

Longer leases are key as FBOs seek private equity to back these development projects, agreed Curt Castagna, president and CEO of the Aerolease/Aeroplex Group. Private equity has become more critical as the cost of these projects are escalating, Castagna added, noting that tariffs on steel are already pushing up building costs by about $15 per square foot.

In addition, the ability to work with airports is all the more important as airspace becomes more complicated and a limiting factor on the heights of structures, Castagna added. FBOs must consider both the FAA and airport officials on these development projects.

Finding available space also has become an issue, added Josh Hochberg, owner and president of Sonoma Jet Center in California. “We are bumping up against other operators” on the airport between airline growth and growth of business aircraft. This is forcing FBOs to become more creative, he added, noting Sonoma has built a hangar, acquired another, and repurposed a third that was underutilized.

Jeff Kohlman, managing principal and co-founder of the Aviation Management Consulting Group, noted the prevalence of aging infrastructure, with many airports home to hangars built in the 1980s or earlier—well before the advent of the large business jets and bizliners traversing ramps today.

Airports are not required to ensure success of their tenants, but should provide the opportunity for success, Kohlman said. FBOs must be able to work with airports to show how everyone benefits from this development.