Signature Files Protest over SNA Leasehold Vote

The Board of Supervisors in Orange County, Calif. late last month was evaluating its decision to switch one of the FBO leaseholds at Santa Ana John Wayne Airport (SNA) from Signature Flight Support to ACI Jet, which it awarded a short-term lease through December next year. The board was scheduled to revisit that decision on February 28.

On January 24 the board had voted four to one in favor of the switch amid complaints by some operators about fuel pricing. Signature Flight Support, which has operated an FBO at the airport for 20 years, vowed to pursue “all avenues available” and subsequently filed a Part 13 complaint with the FAA faulting the bidding process. Signature also urged the board of supervisors to revisit the process.

During the three-hour January 24 meeting, Supervisor Shawn Nelson noted that he had received complaints that Signature and Atlantic Aviation, the other FBO on the airport, had nearly matched each other on pricing that was above market rates. Some attendees at that meeting urged a switch in FBOs, saying pricing was as much as 20 percent above market rates. Other businesses at the airport urged caution, worried that a switch could affect their existing agreements and operations. Both FBOs had lowered prices after complaints were brought to light.

Atlantic Aviation CEO Louis Pepper and Julie Broderick, the area director for Signature, based at SNA, told the board that their goals are the same as the county’s. Broderick added she would work to address concerns.

Selection Process Questioned

Last fall the county had issued a request for qualifications (RFQ) for both FBOs on the field and received half a dozen responses. The process involved an evaluation system that rated Signature as the top-ranked FBO, followed by Atlantic Aviation. California-based ACI Jet, which provides charter, management, maintenance and ground handling services, originally was ranked fifth.

The board opted to retain Atlantic and voted in favor of having a second FBO that was more locally run rather than part of a national chain. Nelson said the board chose to retain Atlantic because it was “more responsive.”

In response to the vote, Signature v-p Geoff Heck said, “The decision by the Orange County board…ignored the unanimous decision of its citizen airport commission, as well as a strong recommendation by the John Wayne Airport staff.” He agreed that the decision to award a short-term lease as the airport finalizes a master plan seemed sound, but he questioned the decision in light of the scoring process. Heck noted that during “closed session…the board of supervisors reordered the rankings, placing ACI first, Atlantic second and dropping Signature to fifth place.” Signature “was unable to participate in the [closed-meeting] discussion and, most important, was unable to hear the board’s rationale for making the decision to re-rank the bidders,” he added.

Signature filed a Part 13 complaint with the FAA, alleging that problems with the bidding process were in violation of SNA’s grant assurance agreements and sent a letter to the county saying the decision “must be overturned” because it violates procurement law. “The selection of ACI was improper, illegal and ill-advised,” the letter states. “The decision resulted from one attempt after another to circumvent fair and open bidding and meeting requirements.”

The letter charges that the decision “improperly and illegally ignores its established bidding procedures, rendering illusory any evaluation,” and “violated procurement law by failing to identify the criteria upon which it awarded ACI a contract—a clear abuse of discretion.” Signature's customer base has “reacted with shock” to the decision, Heck said. He also characterized as baseless conjecture the board's comments about pricing: “Pricing varies by airport based on our costs of operating at a respective airport. We carefully take these issues into consideration when we establish our market fuel pricing.”

Most of its customers benefit from loyalty and other pricing programs, Signature said. Nelson had acknowledged Signature’s pricing differential, but countered that pricing is important to all of the tenants. Signature also called public statements made against its chain “unwarranted and damaging,” and said it “cannot allow inaccurate statements or allegations that negatively impact our well established brand and our customer loyalty to go unanswered.”

Short-term Lease

For ACI Jet, the SNA leasehold would add a fourth location. “We are excited to bring our award-winning, independent FBO to Orange County’s John Wayne Airport,” William Borgsmiller, president of ACI Jet, said of the decision. “A duopoly of sorts has existed at Santa Ana for the past several years between the chain FBOs, and competitive fuel pricing and service has suffered as a result.”

ACI Jet was awarded a short-term lease, through December next year, to take over the east-side FBO and west-side hangars at SNA. During that time, the county plans to evaluate future changes in its FBO facilities, including possible new facilities that can accommodate much larger business jets. It will also assess its FBO needs, among them whether two would be sufficient or a third should be added.

ACI Jet was originally expecting to take over existing operations on or around March 1, and had ordered $1.5 million in new equipment and sought out the requisite permits for a smooth transition. Andrew Robillard, vice president of FBO and facilities of ACI Jet, has been steering the transition at Santa Ana. The company, which operates FBOs at San Luis Obispo, Paso Robles and Oceano, has planned to offer Signature employees the opportunity to interview to work with ACI Jet SNA. ACI Jet also has plans to relocate aircraft in its charter and management fleet to the new location.

But Signature is hoping to convince the board to reverse the decision and bring in an independent party to evaluate the providers.