Airport Business - 33

LEGAL MATTERS
AVOID EXCLUSIVE RIGHTS
Any airport that has previously received
federal funds is precluded from granting
a "special privilege or a monopoly to
anyone providing aeronautical services
to the airport or engaging in aeronautical
use" for as long as the airport continues
to operate (FAA Order 5190.6B at 8.1).
The FAA defines an Exclusive Right as:
"A power, privilege or other right
excluding or debarring another from
enjoying or exercising a like power,
privilege or right. An exclusive right may
be conferred either by express agreement,
by imposition of reasonable standards or
requirements or by other means. Such a
right conferred on one or more parties,
but excluding others from enjoying or
exercising a similar right or rights would
be an exclusive right."
(FAA Order 5190.6B at 8.2). "The
intent of this restriction is to promote
aeronautical activity and protect fair
competition at federally obligated
airports." (FAA Order 5190.6B at 8.1).
According to FAA policy:
"The existence of an exclusive right
to conduct any aeronautical activity at
an airport limits the usefulness of the
airport and deprives the public of the
benefits that f low from a competitive
enterprise. The purpose of the exclusive
rights provision as applied to civil
aeronautics is to prevent monopolies
and combinations in restraint of trade
and to promote competition at federally
obligated airports."
Examples of Exclusive Rights
that may violate the airport's federal
obligations include the following:
* Lease terms that include language
stating that the tenant shall be the sole
operator of its type
* Options to lease additional areas of the
airport or rights of first refusal
* Exemptions to Minimum Standards
If your lease has an Exclusive Right,
it may expose you to an attack by a
competitor or prospective competitor.
A competitor may attack your lease by
any combination of the following:
* Bringing the matter to the airport's
attention and seek to have the Exclusive
Right removed from your lease
* Filing an informal Part 13 complaint
or a formal Part 16 complaint with
the FAA seeking to have the airport
remove the Exclusive Rights; and/or

* A declarator y judgment action
seeking to have the provision declared
unenforceable as a matter of law

certain specified coverages at required
limits and likely require the tenant
to name the landlord as an additional
insured. Indemnification provisions
DOES THE TENANT HAVE
often require a tenant to defend,
A REMEDY IF THE AIRPORT
indemnify and hold the landlord/
Airport Sponsor harmless for claims
CLOSES OR OPERATIONS ARE
from third parties.
LIMITED?
An airport can be closed and/or
Read these provisions carefully
operations limited for any number of
and make sure you understand them
reasons including:
and discuss with your insurance
* Construction and/or improvements
broker. Before entering into a lease,
to the airport
it is recommended that the tenant
* An airport sponsor's decision to close
share the lease with your insurance
the airport after its federal obligations
broker and advise them that you are
cease
required to maintain the specified
insurance coverages. Specifically ask
* Construction adjacent to the airport
assuming that the Airport Sponsor
your insurance broker the following:
does not have the ability to control * Are the insurance requirements
development in the surrounding areas;
com mercia l ly rea sonable a nd
and
obtainable by you
* Flights cease or decrease substantially, * What is the cost for obtaining same
as we saw following the Sept. 11 * Will your insurance cover you in
attacks and the current Coronavirus
case the indemnification provision
Pandemic
is triggered
In order to prepare and protect * Are there claims for which the
insurer would not insure you?
themselves, airport tenants and
If your insurance broker advises
prospective tenants should consider
how their business would be impacted
that the insurance obligations are not
in each of the above cited scenarios
commercially reasonable or you simply
and further consider whether there is
cannot afford the premiums, raise that
anything in their lease that protects
concern with the landlord/Airport
them or provides a remedy. If they
Sponsor. If it is truly commercially
are not already included in the lease, unreasonable and/or you cannot
consider adding the following lease
reasonably afford the premium, the
terms:
landlord/airport sponsor may be
* A covenant by the landlord/Airport
willing to adjust same. If you are in
Sponsor obligating them to maintain
that position, it is likely that they have
and continue to operate the airport for
already adjusted for other tenants
the length of the lease
and if they don't offer you the same
accommodation they may actually be
* A provision providing for a rent
abatement if the airport is closed due
inadvertently giving the other tenant(s)
an Exclusive Right.
to construction or improvements on
the airport or the surrounding areas
Whether you are a first time lessee
for a lengthy period of time; and
just starting out or a seasoned aviation
business seeking to expand, being
* A force majeure clause that specifically
includes references to terror attacks, mindful of the common pitfalls will
pandemics and labor shortages
allow you to complete additional due
diligence, ask tough questions, request
DOES THE TENANT UNDERspecific terms and minimize the risk
before you find yourself involved in
STAND AND ARE THEY PREthe middle of a protracted dispute with
PARED TO COMPLY WITH THE
your landlord, neighboring tenants or
INSURANCE AND INDEMNIFIcompetitors. 
CATION OBLIGATIONS?
Most lea ses include insurance
obligations and indemnif ication
obligations. The insurance obligations
often require the tenant to maintain

OCTOBER 2020 \ AVIATIONPROS.COM / 33
http://www.AVIATIONPROS.COM
Airport Business

Table of Contents for the Digital Edition of Airport Business
