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Equivalent Cost of $1 in <br />Year Airport Operating Expenses <br />1 $1.00 <br />2 $1.06 <br />3 $1.12 <br />4 $1.19 <br />5 $1.26 <br />As shown, the airport's real operating expenses increase <br />sharply and revenues based on fixed rates for five years <br />can fall considerably short of that which is necessary. <br />Another important aspect of airport leasing is that of <br />minimizing cost to the lessor. This policy should be <br />effected by the inclusion in all leases of special provi- <br />sions covering the obligations of lessee and lessor, all <br />of which minimize the maintenance, service, and utilities <br />to be provided to the lessee unless compensation is re- <br />ceived for them. All airport leases should be examined or <br />prepared by a competent attorney to insure that the air- <br />port is not obligated to provide costly services by some <br />obscure clause in the lease. <br />An important source of revenue for the airport is a suc- <br />cessful Fixed Base Operation. As the number of based air- <br />craft and traffic volume increase, an FBO can operate a <br />viable business and generate revenue for the airport <br />through a mutually beneficial lease agreement. <br />It is somewhat difficult to compare the terms of FBO <br />leases with other airports due to the differences in types <br />of operations, types of service, land values, airport <br />activity and unique local factors. However, some basic <br />principles for FBO lease agreements are relatively common <br />throughout many types of airport facilities. It is common <br />practice throughout the industry for an FBO to pay a <br />relatively fixed short-term rental rate for his facili- <br />ties, which may include land and/or building rental, plus <br />a fuel flowage fee. In addition and becoming more fre- <br />quent, the FBO pays a percentage of his gross revenue on <br />all items less taxes and aircraft sales. <br />10-18 <br />