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TO: Mayor Irvin and the Aldermen
FROM: Steve Andras, PE
Interim Manager, Aurora Municipal Airport
The Law Department
DATE: August 21, 2019
SUBJECT:
Fuel Sales at Aurora Municipal Airport
PURPOSE:
To repeal a 2014 requirement that requires operators at the Aurora Municipal Airport to sell aviation fuel at a 25% premium above the price they purchased it for.
BACKGROUND:
In 2014, with the stated goal of creating a "level playing field" between JA Air and Lumanair, the two fixed base operators (FBO) authorized to sell fuel at the Airport, the City Council adopted O14-058 which required each operator to sell fuel at no less than 25% above the price they paid for it. At the time, the City was concerned of the potential of "fuel dumping" - a practice where one FBO could sell fuel below market prices with the apparent attempt to hurt the business interests of the other. As a consequence, both FBOs are now selling fuel above market prices, which makes it less likely that aviators will purchase fuel at the Aurora Airport.
In 2018, Lumanair filed an informal complaint with the Federal Aviation Administration (FAA) alleging that requirements of O14-058 unfairly benefited JA Air.
DISCUSSION:
Though Lumanair's proportion of fuel sales at the Airport increased in the years that followed O14-058's enactment, the FAA found that the ordinance eliminates or severely restricts both FBOs from making reasonable and nondiscriminatory discounts, rebates, or other types of price reductions to volume purchasers in violation of grant assurances made by the City as a condition of receiving federal funds. The FAA also found that the issue could be problematic if one FBO chooses to exclude fuel sales as a profit center within its business model. It concluded by finding that the aviation public has a right to expect the benefits of competitive pricing at federally obligated airports. The FAA informed the City's attorneys that it was unaware of any other airport that mandat...
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