FBO (Mercury Air) doubling hanger rent to run off GA at BHM.......is this legal?

"C J Campbell" :
Not that unpopular. I look at these airfields with 10 year waiting lists
for
hangars, and I can't help but think that the rent is way too low.

It certainly is. If the renter could double his rates and still fill the
hangars, he should do so. However, where the supply is restricted by a local
government, a monopoly or a connivance of the two, free market rules don't
apply. Even though there are people willing to pay the high prices, those
prices are artificially high if the supply is artificially low.

Frankly, the way most airports are managed, they deserve to
fall prey to developers.

Indeed. In the case of my Airport, the FBO doesn't give a rap about the
light GA customers. It (the FBO) doesn't even bother to kill the weeds
growing through the cracks in the GA ramps, let alone sweep the ramps or
paint the hangars and shelters. Its strategy is to raise rents steadily
until a shelter or hangar stays vacant, and hold there a while, meanwhile
making zero investment in the enterprise. Because the FBO is a monopoly,
aircraft owners can like it or lump it.

This is the kind of lazy management that a monopoly can get away with. It is
short sighted and foolish, since it discourages people from owning and
operating aircraft at the field, endangering the very existence of the
airport.

If airports were managed properly, they would charge market rent for
hangars
and other space. They would be profitable, and more hangars and office
space
would be built, lowering prices over all until an equilibrium was reached.

True. And if frogs had wings, no doubt other amazing things would happen.
--
Dan
C172RG at BFM

"Dan Thompson" wrote in message
. ..
By regulation. The question is, is hangar supply at a particular airport
more like a municipal utility (water, garbage collection) or more like a
free market commodity?


As part of the transportation infrastructure it is different from either,
although I would think closer to a municipal utility.

The government doesn't know how to deal with Amtrak, either.

"Dan Luke" wrote in message
...
wrote:
Hangers (like anything else) should rent at market rates.

Except when hangar supply is artificially limited by a public airport's
governing authority, either because they give a single FBO a monopoly or
because they prohibit additional hangar construction. In such cases it
is
very reasonable to regulate hangar fees to avoid gouging.

The same governing body that restricted the supply in the first place?
That's reasonsable?


Amen.
Such monopolies are relatively common, it seems, and tend to suppress
general aviation around the country. In my city, for example, one FBO
controls all the rented tiedowns and hangars at both airports via a
sweetheart deal with the city Airport Authority. Attempts to build more
hangars are stonewalled and rents are artificially high.

Do you see the contradiction there?

"Ray Andraka" wrote in message
...
Sounds like the situation across southern New England. In Rhode Island,
all the
airports are administered by RIAC, who contracted services to Hawthorne.
No new
hangers, and only enough hangers in the state to hold a couple dozen
airplanes.

Sounds like a few places I've seen, and most notably, the state or city
aircraft have first dibs on hanger space.

It is not gouging. If person A is willing to pay $300/mo and person B is
willing to pay $800/mo then person B should get the hanger, period. Any
other scheme is just a subsidy by the hanger owner to the renter. The
market allocates resources more efficiently than any other method. It is
not perfect but it is better than any other.

Mike
MU-2


wrote in message
...

On 8-Aug-2003, "Mike Rapoport" wrote:

Hangers (like anything else) should rent at market rates.

Except when hangar supply is artificially limited by a public airport's
governing authority, either because they give a single FBO a monopoly or
because they prohibit additional hangar construction. In such cases it is
very reasonable to regulate hangar fees to avoid gouging.

-Elliott Drucker

Hanger supply is exactly like real estate supply.

Mike
MU-2


"Dan Thompson" wrote in message
. ..
By regulation. The question is, is hangar supply at a particular airport
more like a municipal utility (water, garbage collection) or more like a
free market commodity?

"Bob Noel" wrote in message
...
In article , "C J Campbell"
wrote:

If airports were managed properly, they would charge market rent for
hangars
and other space.

how is market rent set for a product/service whose supply is restricted?


They would be profitable

why is profitability assured?


, and more hangars and office
space
would be built,

I'd love to see you try to survive a meeting where you propose
this to the anti-airport NIMBY goons around KBED.

lowering prices over all until an equilibrium was
reached.

lower prices? really?

--
Bob Noel

"Mike Rapoport" wrote in message
...
It is not gouging. If person A is willing to pay $300/mo and person B is
willing to pay $800/mo then person B should get the hanger, period. Any
other scheme is just a subsidy by the hanger owner to the renter. The
market allocates resources more efficiently than any other method. It is
not perfect but it is better than any other.


Quite! The only "imperfection" is one party "going off half-cocked" (i.e.,
ignorant/naive) but it's also foolhardy to subsidize various forms of
stupidity.

In article , "Mike Rapoport"
wrote:

If airports were managed properly, they would charge market rent for
hangars
and other space.

how is market rent set for a product/service whose supply is
restricted?

By supply and demand

It's not free supply and demand when the supply is artificially
restricted. Thus the concept of "market rent" doesn't make sense.
In the true supply and demand scenario, increased demand would
increase supply. That isn't possible (a fact you recognize below).

They would be profitable

why is profitability assured?

Because hangers won't be built unless the rents justify the cost.

that won't assure profitability.

, and more hangars and office space would be built,

I'd love to see you try to survive a meeting where you propose
this to the anti-airport NIMBY goons around KBED.

This certainly restricts supply and leads to higher prices but that is
just a fact of life.

that's a cop-out

--
Bob Noel

In article , "Mike Rapoport"
wrote:

Hanger supply is exactly like real estate supply.

no it isn't.

--
Bob Noel

"Bob Noel" wrote in message
...
In article , "Mike Rapoport"
wrote:

If airports were managed properly, they would charge market rent for
hangars
and other space.

how is market rent set for a product/service whose supply is
restricted?

By supply and demand

It's not free supply and demand when the supply is artificially
restricted. Thus the concept of "market rent" doesn't make sense.
In the true supply and demand scenario, increased demand would
increase supply. That isn't possible (a fact you recognize below).

But virtually every "good" is restricted in supply to some degree. The
rental costs for hangars resembles the way rental costs for apartments
works; both have limits imposed by limited availability of space *where it
is most desired*. There are plenty of vacant and inexpensive apartments and
also hangars, just not where they are most desired. Rental costs will
always be higher in desireable locations. Location, location, location.
Any time there have been rent controls it has resulted in problems. It's a
nice short term gain for the renter but bad for the landlord and bad for
everyone in the long term as there is no capital for capital improvements.
Remember the rent controls in Cambridge? How about in New York City that
had landlords abandoning buildings by the dozens? Has rent control ever had
good results for an area?

Peter