The Untested Exception: Hangar Waiting Lists and the Evidentiary Gap in FAA Aeronautical Rate Policy

Overview

Nobody knows what it costs to rent a hangar in the United States. The FAA collects no hangar rent, no occupancy, and no waiting list data from any airport it obligates. Most sponsors have never benchmarked their posted rate against anything outside their own fence line. Appraisers are directed to build comparable sets from other federally obligated airports, so what they produce is the average of a group of administered prices. The one federal figure that touches the question is a revenue line aggregated across an entire airport, on a form that only airports above the commercial service threshold file, which excludes most of the fields where hangars actually sit.

That gap has a price, and someone is paying it. Public sponsors underwrite hangar projects at one to two percent while private developers require thirteen, so the capital that could relieve the shortage builds somewhere else. Seventy-one percent of the airports AOPA surveyed carry a waiting list, and 55 percent of their managers report available land but no funding. The rent a sponsor forgoes never reaches the flying public as a class: it goes to whoever holds the space, and at a ground-leased hangar it is sold on at market to the next holder while the four-hundredth name on the list gets nothing. Order 5190.6C permits a sponsor to charge below cost where market conditions require it, which at many fields is the right answer. At an airport with a four-hundred-name queue, nobody has ever tested whether it is the right answer there, because nothing in the federal architecture asks. What this paper recommends is the instrument the FAA already orders after a complaint, applied on a schedule instead: an independent rent study, from a firm the sponsor does not employ, on a fixed cycle, concluding in writing whether the sponsor’s rates sit at, below, or above the market and by how much. Nothing in this paper concludes that the answer has to be a higher rate. It concludes that a sponsor should be able to produce someone else’s answer when asked.

Disclosure. The author is the principal of an aviation real estate appraisal and advisory firm. The recommendation in Section 10 would create demand for the category of professional service that firm provides. It is made on the merits set out below, and the reader should weigh it knowing that.

Abstract

FAA Order 5190.6C permits a federally obligated airport sponsor to charge aeronautical rates below a self-sustaining level. Paragraph 17.5 conditions that permission on a factual predicate: that market conditions do not allow fees high enough to recover aeronautical costs while remaining low enough to attract and retain commercial aeronautical services. The permission is real, it is deliberate, and this paper does not argue against it. The paper argues that its predicate is never tested.

A hangar waiting list is direct evidence that demand exceeds supply at the posted price. Where a sponsor carries a multi-year queue, the proposition that market conditions do not permit higher fees is contradicted by the sponsor’s own records. Yet no sponsor is required to make a market-conditions finding, no sponsor is required to disclose a queue, and the FAA collects no hangar rent or occupancy data of any kind against which such a finding could be checked. The exception operates by default rather than by determination.

The paper documents the asymmetry that produces this result. Fair market value is a mandatory minimum for non-aeronautical airport property, and the FAA enforces it: in December 2025 the agency found a sponsor in violation of Grant Assurances 24 and 25 for charging below fair market value on hangars in non-aeronautical use. For aeronautical property, where nearly all hangars sit, fair market value is a ceiling, self-sustainability is expressly subordinated to reasonableness, and enforcement operates only on complaint. Because a below-clearing rate injures no party with standing under 14 CFR Part 16, complaints arrive from one direction only.

Three consequences are traced and separated by the quality of evidence available for each. The FAA’s published methodology guidance directs analysts toward comparable sets composed of other administered prices, with no aeronautical-specific alternative. Private hangar development requires a return roughly an order of magnitude above the hurdle rates public sponsors apply to the same structure, so supply growth becomes a function of public capital budgets. Excess demand is then rationed by queue, with the standard welfare consequences that follow from price control with non-price rationing.

Section 7 states the strongest arguments against this position, including the one this paper’s remedy most obviously invites: that raising aeronautical rents toward a clearing level would price out the general aviation constituency federal airport policy exists to serve. The implied magnitude is stated rather than concealed.

Five recommendations follow, and none asks the FAA to build a dataset. The central one is that sponsors be required to obtain an independent rent study on a fixed cycle, from a party other than themselves, and that the study serve as the factual basis for the paragraph 17.5 exception the sponsor is relying on. Every element of that remedy already exists in FAA practice. It operates one sponsor at a time, after a complaint, instead of on a schedule.

Keywords: airport rates and charges, aircraft hangar, grant assurances, administered pricing, fair market rent, rationing by waiting, self-sustainability, airport compliance

JEL Classification: L93, R38, D45, K23, H42

1. Introduction

Ask an airport director why the hangar waiting list runs four hundred names and the answer is rarely price. It is land. It is the capital plan. It is federal funding priority. It is the six to nine years a major hangar project now takes from entitlement to occupancy. Each of these is real, and each is documented below.

None of them explains why the queue does not clear at some rent.

A waiting list is a price statistic before it is a supply statistic. A queue that persists across reporting years at a facility with stable inventory is evidence that the posted rate sits below the level at which demand and supply meet. The economics is not in dispute and is not specific to aviation. Barzel showed that a price held below the clearing level produces rationing by waiting, and that the resulting queue dissipates in real resources rather than accruing to anyone as revenue.¹ Cheung showed that price control does not eliminate competition for the good but redirects it into non-price margins.² Deacon and Sonstelie measured the dissipation empirically.³ Glaeser and Luttmer showed that the dominant welfare cost of a binding price ceiling on housing is not the transfer but the misallocation: the wrong people end up in the units.⁴ A hangar queue is that literature’s textbook case, with one addition. The seller is a public body operating under federal grant conditions that specify when it may price below cost.

Order 5190.6C paragraph 17.5 is that specification. It permits a sponsor to set aeronautical fees below a self-sustaining level where market conditions do not allow fees high enough to recover aeronautical costs while still low enough to attract and retain commercial aeronautical services.⁵ The permission is deliberate. It sits inside a chapter that subordinates self-sustainability to reasonableness for aeronautical users, that instructs FAA staff to investigate general aviation fees only on evidence of substantial revenue surplus accumulation, and that enumerates six further categories of permitted below-market use.⁶ The FAA built this asymmetry on purpose, and a paper that treats it as an oversight will be dismissed by the office that wrote it.

The argument here is narrower and, for a sponsor, less comfortable. Paragraph 17.5 is an exception with a factual predicate. The predicate is a proposition about market conditions at a particular airport. A multi-year waiting list contradicts that proposition directly: it establishes, from the sponsor’s own records, that demand exceeds supply at the current price. No sponsor operating a queue has made the finding paragraph 17.5 contemplates, because no sponsor is required to make it, because nothing in the federal reporting architecture would allow anyone to check.

Compare how the same Order handles its other below-market permissions. Paragraphs 17.12 through 17.17 enumerate specific exceptions for public community purposes, not-for-profit aviation organizations, military units, and transit. Each is named, bounded, and justified on its face. The FAA plainly knows how to write a documented exception. Paragraph 17.5 is the undocumented one, and it is the one that covers essentially every hangar at essentially every public airport in the country.

The contrast with non-aeronautical property sharpens it. There, fair market value is a mandatory minimum, and the FAA enforces it. On December 3, 2025 the Director of the Office of Airport Compliance determined that the County of Los Angeles had violated Grant Assurances 24 and 25 by charging rental rates below fair market value for non-aeronautical hangar use, and ordered the County to commission a new appraisal or establish an alternative fair market value methodology with a scope of work acceptable to the Director.⁷ Two features of that remedy matter. The FAA’s answer to a hangar rate failure is that the sponsor must produce an appraisal or a methodology, because the agency holds no benchmark of its own. And the same economic conduct, charging materially below the clearing level for hangar space, is a compliance violation on one side of a use classification and permitted conduct on the other.

Enforcement on the aeronautical side is complaint-driven. The Rates and Charges Policy provides that absent agreement with users, a sponsor may implement its proposal subject to review on complaint.⁸ Consider who complains. A tenant facing an increase complains, and does so effectively: an August 2025 Letter of Investigation under 14 CFR 13.2 put Westchester County Airport under active FAA review over tie-down rates moving from $345 to $600 to $800 per month.⁹ A competitor alleging discriminatory treatment complains.¹⁰ But a rate below the clearing level injures the four-hundredth name on the list, the general taxpayer funding the operating gap, and the developer who evaluated the site and built elsewhere. None is an aeronautical user of that airport. None holds a lease. None has standing under Part 16. The instrument detects one tail of the rate distribution and is structurally blind to the other.

The rest of the paper traces what follows, and separates the three consequences by the quality of evidence available for each.

Section 4 is about reference prices, and it is the weakest of the three because the causal step cannot be observed directly in public data. The FAA’s published guidance on determining fair market rates directs the analyst toward comparable property at similar airports. Every airport in the resulting set is also federally obligated and also pricing inside the same band.

Section 5 is about capital, and it is the strongest. A public sponsor and a private developer building the same structure at the same cost apply required returns that differ by roughly an order of magnitude. Only one of those two frames supports private development.

Section 6 is about queues, and the evidence there is descriptive rather than causal. Queues are widespread, and the segment of the market where rents respond exhibits shorter queues than the segment where rents are administered. That comparison has a confound this paper names rather than dismisses.

Section 7 sets out the arguments against this position and answers them where it can, including the objection that an independent study is a real cost for a small sponsor. Section 8 states what the evidence cannot support. One item belongs there rather than in the body: this paper makes no claim about hangar loan default rates. No probability of default for hangar-secured lending exists in the public record, the author’s own prior work on recovery rates measures loss severity rather than default frequency in a sample too small and too contaminated by construction to carry a rent argument, and that line of evidence is set aside here and returned to in Section 11.

2. Two Rents, and Why the Distinction Governs

The word “rent” does two jobs at an airport, with opposite signs, and conflating them has confused this literature.

Ground rent is what a sponsor charges the owner of a privately built hangar for the underlying land, typically on a twenty-five to forty-year ground lease. It is a cost to the hangar owner. Ground rent below market raises the value of the hangar leasehold, because the tenant holds the difference.

Hangar rent is what the owner of the hangar, whether that owner is the sponsor or a private party, charges the aircraft owner for storage. It is revenue. Hangar rent below market lowers the value of whatever interest owns the building.

Both are aeronautical charges. Both sit inside the paragraph 17.9 band. They transmit in opposite directions, so an argument built on undifferentiated “administered rent” has not yet said which price it means, and until it does it has not specified a mechanism at all.

This paper is about sponsor-set hangar rent, and about ground rent only where it is stated. The waiting lists are queues for sponsor-owned hangar space. The capital argument in Section 5 concerns the rent a developer must charge to justify building. Where the text says a rate is “administered,” it means a rate posted by a public sponsor on a published schedule rather than negotiated between private parties.

One implication should be stated at the outset because it constrains the paper’s own remedy. Where a sponsor rents hangar space month to month, as at most T-hangar fields, there is no leasehold interest and nothing capitalizes. The gap between the posted rate and the clearing rate accrues to the incumbent renter as a flow, and the queue behind that renter dissipates it in waiting, which is Barzel’s result. Where a hangar sits on a ground lease, the gap between contract ground rent and market ground rent does capitalize into a saleable leasehold, and is realized in cash by whoever sells it. These are different distributional stories with different remedies. The paper keeps them separate.

3. The Architecture

3.1 The aeronautical band, and the exception inside it

The governing instrument is FAA Order 5190.6C, the Airport Compliance Manual, effective February 20, 2026, which cancels and replaces Order 5190.6B.¹¹ Analyses of hangar rate compliance published after February 2026 that cite 5190.6B are citing a superseded document. This includes the FAA’s own Compliance Guidance Letter 2018-3, which has not been reissued.

Paragraph 17.9, “Aeronautical Use Rates,” sets the band:

Aeronautical fees for landside or non-movement area airfield facilities (e.g., hangars and aviation offices) may be at a fair market rate, but are not required to be higher than a level that reflects the cost of services and facilities. In other words, those charges can be somewhere between cost and fair market value.¹²

The stated rationale is that hangars and aviation offices are used exclusively by the leaseholders while airfield facilities are used in common. The same paragraph establishes a hierarchy: the reasonableness requirement of Grant Assurance 22 takes precedence over the requirement for a self-sustaining rate structure with respect to aeronautical users.

That sentence disposes of a claim this paper does not make. There is no fair market value floor for aeronautical hangar rent. Grant Assurance 24 is a best-efforts standard, requiring a fee and rental structure that will make the airport as self-sustaining as possible under the circumstances existing at the particular airport, and paragraph 17.9 expressly subordinates it. Anyone arguing that a sponsor must charge market rent for aeronautical hangar space is arguing against the text.

Paragraph 17.5 goes further and is the provision this paper is about. It permits fees below cost recovery, and it states the condition: at some airports, market conditions may not permit fees high enough to recover aeronautical costs while still low enough to attract and retain commercial aeronautical services.¹³ Paragraph 17.4 frames the self-sustainability test as applying to the sponsor’s overall fee and rental structure and acknowledges that airports differ in their capacity to achieve it. Paragraph 17.6 directs sponsors in that position to establish long-term goals and strategies.

Read together, these are the structure of an exception. Paragraph 17.4 states the duty. Paragraph 17.5 states when the duty yields, and the condition under which it yields is a factual proposition about market conditions at a particular airport. Paragraph 17.6 states what the sponsor should do while the condition holds.

Nothing in that structure is objectionable. Airports differ. Some fields genuinely cannot support cost-recovery rates without losing the services their communities depend on, and the exception exists for them.

The question is how a sponsor, or the FAA, or anyone else, would know which fields those are.

3.2 What the exception’s predicate would require, and what exists instead

Paragraph 17.5’s condition has two limbs. Fees high enough to recover aeronautical costs would have to be too high to attract and retain services. Establishing that requires knowing what the sponsor’s aeronautical costs are, what fee would recover them, and what the demand response to that fee would be.

The Order requires none of it. It does not require a sponsor to make a market-conditions finding, to document one, to revisit one, or to disclose the facts on which one would rest. Paragraph 17.6’s long-term goals requirement has no reporting attached. A sponsor charging below cost recovery in 2026 because it charged below cost recovery in 2016 has satisfied every procedural obligation the Order imposes.

Compare the Order’s other below-market permissions. Paragraphs 17.12 through 17.17 enumerate exceptions for public community purposes, not-for-profit aviation organizations, military units, and transit uses. Each is a named category with stated boundaries. A sponsor relying on one of them can say which one and why.

Paragraph 17.5 is the only below-market permission in the chapter whose predicate is a contested empirical proposition, and it is the only one with no documentation attached. It is also the one that covers ordinary hangar pricing at essentially every general aviation airport in the country.

Paragraph 17.8 completes the picture from the enforcement side. The FAA generally investigates general aviation fees only on evidence of substantial revenue surplus accumulation.¹⁴ That is a trigger for the over-charging tail. There is no corresponding trigger, and no data on which one could operate, for the other.

3.3 The queue as disproof

A waiting list contradicts paragraph 17.5’s predicate directly.

The predicate asserts that a higher fee would fail to attract and retain aeronautical activity. A queue establishes that at the current fee, more aeronautical activity wants access than the sponsor can accommodate. These are not compatible propositions at the same field in the same period. A sponsor may still be correct that a fee sufficient to recover costs would be too high; that is an empirical question about the slope of the demand curve. But the sponsor holding a four-hundred-name list has affirmative evidence that the current fee is not at the point where retention becomes a constraint, and that evidence is in the sponsor’s own records.

The evidentiary posture is what makes this uncomfortable. The waiting list is created by the sponsor, maintained by the sponsor, frequently published by the sponsor, and producible under state public records law. A sponsor invoking paragraph 17.5 while operating a persistent queue is relying on a market-conditions proposition its own files contradict.

That is not a violation. Paragraph 17.5 imposes no finding requirement, so there is nothing to violate. It is a gap between what the exception contemplates and what the compliance architecture asks for, and it is the gap this paper proposes to close.

3.4 Non-aeronautical property: a floor, and it is enforced

The contrast within the same chapter is direct. Paragraph 17.10, “Nonaeronautical Use Rates,” provides that rates charged for non-aeronautical use of the airport must be based on fair market value. Paragraph 17.11, “Fair Market Value,” states that fair market fees are the required minimum for non-aeronautical use, and explains that fair market value is established by reference to negotiated fees for comparable uses or by appraisal of comparable properties, with adjustment for airport-specific limitations.¹⁵

Figure 1 sets the two regimes side by side. The 2016 hangar use policy applies the rule at the facility level. Storage of an active aircraft is aeronautical use. Non-aeronautical use of a hangar requires non-aeronautical fair market rental fees, “even on an interim basis.”¹⁶

Los Angeles County is the recent instance. In Docket 16-24-14, the Director found violations of Grant Assurances 24 and 25 based on the County charging below fair market value for non-aeronautical hangar use and raising those rates only incrementally, and ordered a new appraisal or an alternative fair market value methodology with a scope of work acceptable to the Director.¹⁷ Two cautions belong with that citation. The Director’s Determination is not final agency action; it is appealable to the Associate Administrator, and an Order of the Associate Administrator issued in the same docket nineteen days later. The findings summarized here are drawn from that Order and from the complainants’ filing rather than from the Determination itself, which the author has not retrieved. Anyone citing the case for a pin page should obtain the underlying document.

3.5 Enforcement runs one direction

The three aeronautical rate matters currently visible in the public record are all challenges to increases, as Figure 2 shows.

Westchester County Airport received a Letter of Investigation under 14 CFR 13.2 on August 15, 2025 concerning tie-down rate increases from $345 to $600 to $800 per month and Grant Assurance 22(a) and (b). That matter concerns outdoor tie-down parking rather than hangar space, and is relevant here only for the direction of the complaint.¹⁸ At Centennial Airport in Colorado, town hangar rates moved from $500 to $600 to $660 and then to $1,200 per month over four years, the last an 82 percent increase effective April 1, 2026, followed by a grant assurance complaint on the same theory.¹⁹ In Docket 16-26-05, a complainant challenged the City of Grand Prairie’s uniform five-cent-per-square-foot step, which raised Port-A-Port ground lease rates from $0.10 to $0.15 per square foot, a 50 percent increase, while most T-hangar and City-owned hangar rates moved from roughly $0.25 to $0.26 up to roughly $0.30 to $0.31, an increase of 19 to 20 percent. That matter remained pending before the Director as of April 2026.²⁰

That pattern comes from the structure of the remedy rather than from the sample. Part 16 requires a complainant with a stake in the airport’s aeronautical operations, and the parties injured by a rate below the clearing level do not have one.

3.6 Nothing verifies the rate, at any level

Figure 3 summarizes what the four federal sources hold. Neither the Terminal Area Forecast nor CATS Form 5100-127 discloses rent per square foot, hangar dimensions, lease terms, escalation clauses, or reversion provisions for any individual hangar. Form 127 line 4.1, covering land and non-terminal facility leases, is an airport-wide aggregate.

The coverage gap exceeds the granularity gap. The Form 127 filing requirement attaches at the commercial service threshold, which excludes the general aviation airports where most hangars are. A check of eight New York, New Jersey, and Connecticut general aviation fields, namely Bridgeport, Morristown, Republic, Waterbury-Oxford, Danbury, Essex County, East Hampton, and Dutchess County, returned zero filings in any year from fiscal 2010 through fiscal 2026.²¹

Where the data exists, cross-airport comparison is invalid, because sponsors classify identically situated revenue differently. Teterboro reports zero hangar rentals while hosting more than one hundred based jets, because the Port Authority ground-leases to fixed base operators who own the hangars, sending the revenue to a different line.²² The Government Accountability Office documented the general problem in April 2026, finding that CATS data contain anomalies and potential errors including filings from airports not required to file, that the FAA lacks sufficient data controls to ensure data quality, and that the agency lacks procedures to consistently detect submission errors or identify newly required filers.²³

The FAA Form 5010 airport master record, which carries facility attributes, was returning null values across its entire based-aircraft and operations statistical block feed-wide in the August 2026 NASR cycle, across all eleven Northeast airports tested.²⁴

The private record does not fill the gap. A search of authority rate pages, published rate studies, and commercial listing platforms conducted for this research in August 2026 identified no published corporate hangar building rate at any airport in New York, New Jersey, Connecticut, Massachusetts, or Pennsylvania, including Teterboro, Republic, Hanscom, MacArthur, Morristown, Trenton-Mercer, and the Connecticut Airport Authority fields. Regional authorities publish tie-down rates and landing fees; hangar rates are quoted on request. On the two national listing platforms searched, New York carried three hangar listings, Connecticut one, and New Jersey none, and every one was priced “contact for pricing.”²⁵

A consequence follows for research design, and it constrains this paper as much as any other. Fields that publish rate cards are systematically larger, better staffed, and more likely to have adjusted rates recently. Any series built from published sources selects on a variable correlated with the outcome.

This section establishes a negative rather than a demand. Nobody in the system, the sponsor included, is currently positioned to say whether a given rate sits at, below, or above the market. Section 10 takes up who should be, and the answer there is not the FAA.

3.7 A note on the worked example in Compliance Guidance Letter 2018-3

Compliance Guidance Letter 2018-3, “Appraisal Standards for the Sale and Disposal of Federally Obligated Airport Property,” dated August 27, 2018, governs disposal rather than rate setting. It is nonetheless a widely used published FAA source for the return-on-value logic sponsors and their consultants apply to rent, and it contains the following:

Gross Annual Rent @ FMV = (CAP Rate x Appraised FMV) / (1 - Vacancy Rate - Annual Management Fee Rate)

with a worked example, as printed: “Gross Rent @ FMV = (8% x $10) / (1- .03 - .05) = $8.70 per square foot/ year (rounded),” the ten-dollar input described as the per-square-foot value of industrial highest-and-best-use land without ramp access.²⁶

The example does not compute. Eight percent of ten dollars is eighty cents, and divided by 0.92 the result is $0.87 per square foot per year. The $8.70 output would follow from a $100 input.

The output is the misprint rather than the input. Industrial land without ramp access at $100 per square foot implies roughly $4.4 million per acre, which is not a plausible figure for the property class described. And $0.87 per square foot per year sits inside the range of contemporaneous airport ground rents: the Truckee Tahoe study discussed in Section 5 proposed ground lease rates of $0.550 per square foot per year on a market principle and $1.452 on a cost-recovery principle.²⁷

This is recorded for two reasons. It should be corrected. And it bears on the paper’s central proposition in a limited way that is worth stating precisely rather than overstating: a decimal error has stood in the FAA’s most-cited published example of market rent derivation since 2018, through a change of Compliance Manual editions, and the same document still cites the cancelled Order 5190.6B. That is consistent with a guidance document that receives little use and little scrutiny. It is not, by itself, evidence about the agency’s rate program, and it is not offered as such.

4. Reference Prices

This is the weakest of the paper’s three causal claims, and it is presented first so that the stronger material is not read through it.

FAA guidance on establishing fair market rates directs the analyst off the subject airport. Compliance Guidance Letter 2018-3 states: “It is highly recommended for determining FMV rates that aeronautical property is compared to other aeronautical property serving the same function at similar airports throughout the region or state.”²⁸ Order 5190.6C paragraph 17.11 recognizes appraisal of comparable properties as a route to fair market pricing, though that paragraph governs non-aeronautical property. ACRP Research Report 213 reaches the same methodological conclusion for small airports. The leading published rate studies follow it; a 2023 market rent update for six Minneapolis-area reliever airports concluded that the most accurate and effective methodology is the assessment of rental rates of similar land at similar and competing airports.²⁹

The instruction answers a real problem. It exists to stop an analyst from validating a sponsor’s rate by reference to that sponsor’s own rate, and it correctly points off-airport.

It does not solve the problem it appears to solve, because every airport in the resulting set is also federally obligated, also pricing inside the paragraph 17.9 band, and also subject to the same budget process. Moving from one sponsor’s posted rate to the average of eight sponsors’ posted rates improves precision without establishing that any of them approximates a market rate.

Two features of the compliance framework compound this.

The standard comparable source is identified in the practice literature as constrained and used anyway. Published airport rate schedules “provide useful baseline information but frequently reflect regulatory constraints rather than unconstrained market rates.”³⁰

And nondiscrimination policy removes the variation an empirical test would need. Grant Assurance 22 requires that comparable aeronautical users be treated without unjust discrimination, and Order 5190.6C paragraph 18.18(a) requires a consistent methodology in establishing fees for comparable aeronautical users. Sponsors implement this as within-class rate uniformity, which is the correct implementation. It is also, by construction, the elimination of within-airport rent dispersion, so a hedonic or paired-sales analysis at a single field has no identifying variation to work with.

Three limits on this section should be stated rather than left for a reader to find.

The guidance relied on is disposal guidance and, in the case of paragraph 17.11, non-aeronautical guidance. There is no aeronautical-specific FAA methodology document. That absence is itself the point, but it means this section describes what analysts reach for rather than what the Order requires.

Under paragraph 17.9 a sponsor may charge cost regardless of any appraisal, so an appraised fair market value does not bind an aeronautical rate. Appraisal is a channel through which a reference price forms in the wider market. It is not the mechanism by which a sponsor sets its own number.

And the two accounts of how sponsors actually set rates, budget process and inertia on one hand, comparable-set reference on the other, are alternatives rather than sequential links. The evidence in this paper supports the first. Rate schedules held flat for years while replacement cost and land value move produce a gap that widens until a sponsor absorbs the political cost of a correction, at which point the correction is large enough to attract a complaint. The Centennial sequence, $500 to $1,200 with an 82 percent single step, is what deferred correction looks like when it arrives. Whether the comparable-set rule additionally anchors the level across a region is a testable proposition, stated as P4 in Section 11, and it is not established here.

5. Capital

This is the strongest of the three claims, and it does not depend on Section 4.

The required return of a public sponsor and the required return of private capital, for the same structure at the same cost, differ by roughly an order of magnitude.

The public end is documented. In June 2016, Aviation Management Consulting Group prepared an executive hangar financial study for the Truckee Tahoe Airport District. The building structure was priced at $58 per square foot and roughly $300 per square foot all-in including site work and soft costs. The study underwrote at a 1 percent discount rate and produced an internal rate of return of 1.0 to 1.7 percent, proposing a market-rate principle of $5.270 per square foot per year against a cost-recovery principle of $4.860, compared with the existing rate of $5.1744.³¹

Nothing in that analysis is improper. A 1 percent discount rate is a policy rate. A public airport district is not required to earn a market return on a facility built to serve its constituents, and paragraphs 17.5 and 17.6 contemplate the posture.

The private end is also documented. In its Series 2026 bond investor presentation dated January 12, 2026, Sky Harbour Group presented target unit economics for purpose-built corporate hangar development: target development cost of approximately $300 per square foot, target average annual rent of approximately $40 per square foot, and target NOI yield of approximately 13 percent. The presentation carries an illustrative-purposes disclaimer and states targets rather than realized results.³²

Table 1. Required rent for a corporate hangar under two hurdle-rate frames

Rows 2 through 5 state net operating income as cost multiplied by the return rate. The Truckee Tahoe row states a rent. NOI and rent are not the same quantity; Sky Harbour’s own figures imply the difference is small at that price point, but the comparison across rows is approximate. Cost bases are not adjusted to a common year. This table describes purpose-built corporate hangars at roughly $300 per square foot. It does not describe the T-hangar segment, whose cost basis is discussed below.

Figure 4 plots the same comparison. The span from the Truckee Tahoe row to the high-cost metropolitan row is roughly a factor of ten. Between the two documented cases, Truckee Tahoe and Sky Harbour, it is roughly a factor of eight. Either way the difference exceeds every cost input in the table, which is what separates it from a modelling artifact at the margins of a rate study.

Both frames are legitimate within their own logic. The public sponsor is not doing anything wrong by underwriting at a policy rate.

Only one frame supports private development. A developer returning capital at 13 percent cannot build at a rent set to recover a public sponsor’s cost at 1 percent, and no amount of ambition closes that.

And the frames do not stay separate, because the two products compete for the same tenant at the same field.

5.1 The T-hangar segment is different, and the difference cuts against a simple story

Table 1 describes corporate hangars. Every waiting list observation in this paper is a T-hangar queue. The two segments have different cost bases and, on the available figures, different yields.

A T-hangar is cited in the appraisal literature at $80,000 to $120,000 per unit for basic construction, on a unit of roughly 1,500 square feet, which is on the order of $67 per square foot.³³ At a rent of $500 per month, that is a gross income return of about 6 percent, against the roughly 1.8 percent gross yield implied by the Truckee Tahoe executive hangar figures.

On those numbers the T-hangar segment carries the lower absolute rent and the higher gross yield, which is not what compression looks like. Any claim that T-hangar rents are more suppressed than corporate rents goes beyond the figures in this paper.

What is supported is the net position. The same source puts net return to equity on a T-hangar at 2 to 4 percent after construction financing, debt service, operating costs, and vacancy, and states the consequence directly: new T-hangar construction typically occurs only where an airport authority subsidizes the project, an operator builds for its own use and accepts a below-market return, or an investor accepts a low current return for other reasons.³⁴ That passage is an appraisal instruction rather than a market study, and it rests on the author’s own textbook. Read it as a statement of practitioner understanding rather than as measurement.

The reason the gross and net figures diverge is that T-hangars carry a higher operating and management burden per dollar of revenue than a single-tenant corporate hangar, and they carry lease-up risk across many small tenants rather than one creditworthy one. The distinction matters for the paper’s remedy, because it means the rent increase required to attract private T-hangar capital is large. Section 7 states the magnitude.

5.2 What a private developer actually charges

The relevant benchmark for what rent clears when a private party sets it is what private parties charge. Sky Harbour reported pre-leasing at an average of $44.85 per square foot, re-leasing uplift averaging 22 percent on mature leases, and raised its CPI escalator floor from 3 percent to 4 percent.³⁵ Recent verified project costs support the $300 per square foot basis: approximately $310 per square foot at Blue Grass, $255 at Gary/Chicago, $388 at New York Stewart, $278 at Hudson Valley Regional, and $435 at Pensacola.³⁶

Sky Harbour builds on federally obligated airports. Its presence is direct evidence that private capital has not withdrawn from the corporate hangar segment inside this regulatory regime, and any claim that the regime forecloses private hangar development is refuted by the company’s existence. The claim this paper makes is narrower: at rents set to recover a public sponsor’s cost at a policy discount rate, private development does not clear, which is why the private development that does occur is concentrated in the segment where sponsors do not set the retail rate.

6. Queues

Prevalence is measurable, and Figure 5 collects it. An AOPA Airport Support Network survey of more than 700 volunteers reported that 71 percent of surveyed airports maintain a hangar waiting list, that 72 percent of aircraft owners on those lists waited from six months to more than two years, that only 8 percent of hangars were described as in excellent condition, and that 36 percent needed some or major repair.³⁷ A joint AOPA and PennDOT assessment of all 116 Pennsylvania public-use airports concluded the state would need 38 percent more hangars to meet current demand.³⁸ The AOPA respondent base is self-selected aviation volunteers rather than a random sample of sponsors, and the prevalence figure should be read as describing the airports those volunteers serve.

Individual queues are visible where sponsors publish. Venice Municipal Airport in Florida operates 158 T-hangars on a rental-only basis and has carried a waiting list exceeding 500 names, described as the longest in Florida. The City’s own rate review is reported to have concluded that its rates run at one-half to two-thirds of market.³⁹ Chandler Municipal Airport in Arizona reported 248 names in May 2026.⁴⁰

The Venice figure requires a caution the author’s own source imposes. That characterization reaches this paper secondhand through the author’s Property-Tax Assessment of Aircraft Hangars, which records it from a City rate review and instructs that the underlying study be retrieved before the language is quoted. It has not been retrieved. The Venice rate gap should be treated as a lead rather than as an observation, and the derived range of 33 to 50 percent below market inherits that status.

Setting Venice aside, this paper contains no verified observation of the gap between an administered hangar rate and a contemporaneous market rate at the same airport. That absence is the paper’s principal empirical limitation and the reason Section 11’s first recommendation is what it is.

6.1 Where the subsidy goes

The distributional consequence differs by tenure, and Section 2 set out why.

At a rental field like Venice, no leasehold exists. The gap between the posted rate and the clearing rate is a flow to the incumbent renter for as long as the tenancy lasts. Behind that renter, the queue converts the remaining value into waiting, which produces no revenue for the sponsor and no benefit to anyone. Barzel’s result is that the transfer is smaller than the price gap suggests, because rationing by waiting dissipates rather than redistributes.⁴¹ Glaeser and Luttmer’s result is that the larger cost is misallocation: the aircraft in the hangars are not the aircraft that value them most.⁴² Neither cost appears in any sponsor’s financial statements.

Where a hangar sits on a ground lease, below-market ground rent capitalizes into a saleable leasehold. The appraisal treatment is direct: because contract ground rent is below market, the tenant holds a positive leasehold interest, and a leasehold trades at a premium to account for a favorable ground lease with below-market rent.⁴³ That value is realized in cash when the leasehold sells, and the buyer pays market for it and receives no subsidy. Whatever public purpose the below-market ground rent served ends at the first resale.

The two cases share a conclusion. The forgone revenue does not reach the flying public as a class. It reaches whoever holds the space, and then either dissipates in the queue or converts into a private capital gain.

6.2 The within-market comparison, and its confound

At the same airports, under the same sponsor, the same grant assurances, the same federal funding priority, the same permitting regime, and the same construction technology, box hangars are less frequently undersupplied than T-hangars. The appraisal literature states the mechanism as rent: because box hangars command higher rents, the financial return on the investment is more attractive, and many airports have invested in box hangar development, reducing waiting lists for this category.⁴⁴

If land availability, entitlement timelines, or federal funding priority were the operative cause of persistent queues, both segments would queue at a given field. The comparison holds those constant.

It does not hold constant the thing that most plausibly explains it, and the alternative hypothesis deserves to be named rather than absorbed. Box and corporate hangars are frequently developed and owned by private parties on ground leases, so their retail rent is set by the owner and is a market rent by construction. T-hangars are typically sponsor-owned, so their rent is administered. On that account the observed pattern, higher rents and shorter queues where hangars are privately provided, follows entirely from who sets the price and requires no claim about FAA enforcement posture at all.

That alternative is at least as good as the one this paper advances, and the two are not mutually exclusive. Three further confounds survive: a turbine operator is close to price-inelastic on hangar space where a piston owner is not, so queue length under a binding ceiling would be longer in the T-hangar segment even at equal proportional suppression; a box hangar is one decision by one financeable tenant against a speculative multi-tenant T-hangar row; and the comparison as stated rests on a single passage in the author’s own textbook, with no airport named, no unit counts, and no queue depths.

The comparison is a hypothesis. It appears in Section 11 as P3, where it belongs.

6.3 Demand is not static, and the constraint sponsors report is capital

The cumulative square footage of the U.S. business aircraft fleet grew by 73 percent between 2010 and 2025, and the footprint of aircraft with tail heights above 24 feet grew by 120 percent over the same period, adding roughly 46 million square feet of aircraft over sixteen years.⁴⁵ The composition shift matters as much as the volume. A Gulfstream G700 has a wingspan of 103 feet and a tail height near 26 feet, requiring a door opening of 28 feet, where a substantial share of 1970s and 1980s hangar stock offers 20 to 24 feet.⁴⁶ Inventory that exists is not always inventory that fits.

Against that, the constraint sponsors themselves report is capital rather than land. In the AOPA survey cited above, 55 percent of responding airport managers reported having available land but no funding.⁴⁷

That finding is useful here, and its limits should be stated. It distinguishes land from funding. It does not distinguish price from non-price explanations, and a sponsor reporting “land but no funding” is describing a public capital budget problem, which is the rival explanation for persistent queues and not this paper’s. What it does establish is that the most common non-price explanation offered for hangar queues, that there is nowhere to build, is not what a majority of airport managers say when asked.

7. The Case Against This Paper

7.1 The asymmetry is deliberate, so its absence is not a failure

This is the strongest objection and it is substantially correct.

Chapter 17 contains at least six independent drafting choices pointing the same way. Paragraph 17.9 subordinates self-sustainability to reasonableness for aeronautical users. Paragraph 17.5 permits below-cost fees. Paragraph 17.6 directs long-term goals rather than correction. Paragraph 17.8 tells FAA staff not to investigate general aviation fees absent substantial revenue surplus. Paragraphs 17.12 through 17.17 enumerate further permitted below-market uses. The statute conditions self-sustainability on “the circumstances existing at the particular airport.” Congress and the agency built a permissive regime on purpose, to protect aeronautical users from a landlord with no competitor within useful distance.

None of that answers the objection this paper actually raises, which is that a policy chosen deliberately can still be administered without any information about what it costs.

Paragraph 17.5 conditions its permission on a market-conditions proposition, and the agency has no way to know at which airports that proposition holds. Paragraph 17.8’s investigation trigger is calibrated to revenue surplus, which is the wrong instrument for detecting the case this paper describes: a sponsor charging below cost has no surplus by construction, so the trigger cannot fire. Section 10 therefore proposes no enforcement and no new federal data program. It proposes that a sponsor relying on the exception be able to produce, on a schedule, an independent professional opinion on the proposition the exception turns on.

A reader who concludes that the FAA should nonetheless leave the exception unadministered has reached a defensible position. That reader should at least reach it knowing the magnitude of what is being permitted, which today neither the agency nor the sponsor knows.

7.2 Raising rents would price out the constituency the policy exists to serve

This is the objection the paper’s remedy most obviously invites, and the honest answer requires stating a number.

Take the T-hangar figures in Section 5.1 at face value. A $100,000 unit at a 13 percent return on cost requires roughly $1,083 per month. Against a $500 baseline that is an increase of about 117 percent. That is the order of magnitude required to attract private T-hangar capital at the cost basis and hurdle rate this paper reports.

Start with the concession.

An increase of that size would remove aircraft owners from hangars. Some would move to tie-downs, some to other fields, some out of aircraft ownership. Those owners are the light general aviation constituency that federal airport policy exists in substantial part to serve, and a sponsor weighing that outcome against a shorter waiting list is making a distributional judgment, not a compliance error. Nothing in Order 5190.6C requires it to choose the shorter queue.

Note also that Centennial’s $1,200 per month, which Section 3.5 records as the object of a grant assurance complaint, is close to the figure a 13 percent return on a corporate-quality town hangar would imply. This paper does not conclude that Centennial priced correctly, and it lacks the based-aircraft data to say what happened afterward. But a paper arguing that administered rents sit below clearing levels should acknowledge that the sponsors currently under complaint may be the ones that moved toward them.

The second point is that the remedy proposed in Section 10 does not require any rate to change. It requires that a sponsor invoking paragraph 17.5 be able to say so, against an independent opinion of where the market sits. A sponsor that concludes a queue is preferable to pricing out its based aircraft owners can record exactly that, and it is a better answer than the current default, which is silence.

7.3 An independent rent study is a real cost for a small sponsor

Correct, and it is the objection that most deserves an answer.

A USPAP rent study is a five-figure engagement. A field with twenty T-hangars, a part-time manager, and an enterprise fund that barely covers mowing cannot absorb one every five years, and a requirement that ignores this would either be waived in practice or would be met with the cheapest possible work product, which is worse than nothing because it launders the rate rather than testing it.

Section 10.2 scales the requirement for that reason. A small sponsor’s obligation should be satisfied by participation in a state or regional survey rather than by its own engagement. That infrastructure already exists and is already used as a benchmark by appraisers and sponsors: the Montana Aeronautics Division, the Michigan Airports Association, and the Florida, Texas, and Wisconsin state aviation offices all run recurring rate surveys of their public airports.⁴⁸ The Metropolitan Airports Commission covers six reliever airports in a single commissioned study.⁴⁹ Spread across a state’s general aviation fields, the per-airport cost of a shared study is a small fraction of a standalone one.

Two further points bear on cost, and sponsors underrate both.

Sponsors weigh a study against doing nothing, which is the wrong comparison. The real alternative is a Part 16 proceeding, an FAA-ordered appraisal with a scope of work acceptable to the Director, a corrective action plan on the Director’s timetable, and a stated position on reimbursement of foregone revenue. That is what Los Angeles County is doing now.⁵⁰ A study a sponsor commissions on its own schedule is cheaper than one the agency orders.

And a current independent study is the complete answer to the tenant challenging an increase, which is the proceeding sponsors actually face. A sponsor holding a signed, certified rent conclusion and a documented consultation record is in a different posture from one holding a rate schedule and no basis for it. The sponsors in the current docket are in the second category.

7.4 The box hangar comparison has an unresolved confound

Correct. Section 6.2 states the confound, names the alternative hypothesis, and moves the comparison to the research agenda, where it belongs. Nothing in Section 10 depends on it.

8. What This Evidence Cannot Support

No verified observation of an administered-versus-market hangar rate gap appears in this paper. The Venice characterization is secondhand and unretrieved, and the author’s own source instructs that it not be quoted until the City study is obtained. The illustrative T-hangar example in the appraisal literature, $3,500 administered against $5,000 to $5,500 at competing unregulated airports, a gap of 30.0 to 36.4 percent, is a constructed example.⁵¹ The paper’s central empirical premise is therefore supported by argument and by queue evidence, not by a measured price gap.

No claim is made about hangar loan default rates. No probability of default for hangar-secured lending exists in the public record. The author’s prior work reporting a mean recovery of 38.4 percent on 47 involuntary dispositions measures loss severity rather than default frequency, is unreplicated, and carries a denominator that includes lender protective advances made as ground rent payments, which mechanically lowers measured recovery as administered ground rent rises. That construction runs opposite to the direction a rent-suppression thesis would predict, and the dataset cannot resolve it without decomposition. The line of evidence is set aside here and appears only as P5 in Section 11.

The hurdle-rate comparison rests on two observations a decade apart. One municipal district’s 2016 policy rate against one merchant developer’s 2026 stated target, with cost bases unadjusted. It establishes the magnitude of a difference between two identified frames. It does not estimate a population parameter, and Table 1’s rows 2 and 3 are illustrative constructions rather than observed cases.

The Sky Harbour figures are targets. The company’s portfolio-wide weighted average occupancy was 78.1 percent at December 31, 2025, so roughly $40 per square foot does not clear every market either. The clearing rent lies somewhere between the administered and merchant frames, and this paper does not estimate it.

Reference-price contamination is asserted, not demonstrated. No sponsor is exhibited setting an aeronautical hangar rate from other airports’ administered rates. Section 4 states the limits.

Sample selection is structural, and it applies to this paper’s own sources. Airports that publish rate cards are systematically larger and better staffed. The AOPA prevalence figure comes from self-selected volunteers. Neither is a random sample.

The regulatory reading of one provision could not be verified. Revenue Use Policy sections VII.B.5 and VII.C, commonly cited for the aeronautical carve-out and the non-aeronautical fair market value mandate, sit at 64 FR 7721. Every proposition in Section 3 is anchored instead on Order 5190.6C paragraphs 17.4 through 17.11, which are current and were verified against the published chapter.

Two prior citations in this research program are retired here. A claim that 71 percent of U.S. airports report hangar waiting lists, appearing in prior work without an inline citation, is properly sourced to the AOPA Airport Support Network survey and should carry that attribution and its sampling caveat. A radio interview characterization that “something like over 80 percent of airports that have been surveyed have waiting lists” is hedged, names no survey, and conflicts with AOPA’s own published figure; it is not used.

9. Compliance Exposure for Sponsors

This section is addressed to sponsors and their counsel, and it does not depend on the FAA changing anything.

Paragraph 17.5 is an exception a sponsor is relying on, whether or not it has said so. A sponsor charging aeronautical hangar rates below cost recovery is operating inside paragraph 17.5. No finding is required today. But a sponsor that has never articulated why market conditions at its field prevent higher fees has no record to produce if the question is ever asked, in a Part 16 proceeding, in a state audit, in a rate dispute with a tenant, or in litigation over a lease renewal. The cost of creating that record while the rate is uncontested is low. The cost of assembling it afterward is not.

A persistent queue is evidence the sponsor generates and holds. It is created by the sponsor, maintained in the sponsor’s records, frequently published on the sponsor’s website, and producible under state public records law. A sponsor whose rate rationale rests on limited demand while its own list runs to three figures should expect that tension to be raised by an opposing party. The point is not that a queue proves a violation; paragraph 17.5 imposes no finding requirement, so there is nothing to violate. The point is that the sponsor’s own file contains the material an opponent would use, and the sponsor has not looked at it.

Grant Assurance 24’s operative language is about circumstances. The assurance requires a fee and rental structure that will make the airport as self-sustaining as possible under the circumstances existing at the particular airport, taking into account such factors as the volume of traffic and economy of collection.⁵² Volume of traffic and economy of collection are the enumerated circumstances. Excess demand is a circumstance of a different kind, and a sponsor asserting that its structure is as self-sustaining as possible while carrying a multi-year queue has an argument to make rather than a self-evident position. Paragraph 17.9 subordinates this duty to reasonableness, which is a complete answer to any claim that market rent is required. It is not an answer to the question of whether the sponsor has made any effort at all.

Deferred correction converts a manageable problem into a complaint. The sponsors currently under FAA scrutiny held rates for years and then moved them by 82 percent in a single step. Sponsors that escalate annually are not in the docket. Annual escalation against a published mechanism, CPI with a collar or a stated fixed percentage, is contemplated by paragraph 12.3.b(4)’s periodic-adjustment expectation and is far less likely to attract a complaint than one large step.

On uniform per-square-foot adjustments, the exposure is narrower than it first appears. Grand Prairie’s uniform five-cent step produced a 50 percent increase on one unit class and 19 to 20 percent on another, and that disparity is before the Director. A uniform rate per unit of measure is ordinarily a consistent methodology, and paragraph 18.18(a) does not on its face require equal percentage changes; the same uniformity principle is what makes within-class nondiscrimination work. What Docket 16-26-05 will resolve is whether differential percentage impact across aeronautical unit classes is itself a methodology question. Sponsors correcting a long-deferred gap should watch that docket before choosing between a flat per-square-foot step and a proportional one, and should document the reason for the choice either way.

The independent study is the defense, and it is available now. Rates Policy paragraph 1.1.1 and Order 5190.6C paragraph 18.20(a) call for advance consultation with information sufficient for the user to assess reasonableness. Paragraph 12.3.b(4) contemplates rent set on a reasonable basis, “e.g., by an appraisal.” A sponsor that holds a current rent conclusion from a firm it does not employ, consults in advance on that basis, and escalates on a published mechanism has discharged what the Order asks and has an answer to the tenant who challenges the next increase. A sponsor working from a schedule last touched a decade ago has neither. Nothing in Section 10 has to be adopted for a sponsor to do this in the meantime, and the sponsors that already do it are not the ones in the docket.

10. Recommendations for the Federal Aviation Administration

The remedy is not a new federal dataset. The FAA already knows what the right instrument is, because it has ordered it: the corrective action in Haney was that the sponsor commission an appraisal, or establish a methodology, with a scope of work acceptable to the Director.⁵³ Order 5190.6C paragraph 12.3.b(4) contemplates the same thing prospectively, providing that rent be set on a reasonable basis, “e.g., by an appraisal,” and that leases running more than five years provide for periodic rate adjustment.⁵⁴ Compliance Guidance Letter 2018-3 already supplies the qualification standard, requiring a written report meeting USPAP by a certified or licensed appraiser on the ASC National Registry.⁵⁵

Every element of the remedy exists. What is missing is that it operates one sponsor at a time, after a complaint, rather than on a schedule.

Five recommendations follow.

10.1 Require a periodic independent rent study

Each NPIAS sponsor with aeronautical hangar or ground lease revenue should obtain an independent rent study on a fixed cycle and certify to the FAA that a current one is on file.

Nothing is submitted and no new form is created. The study is a work product the sponsor commissions, holds, and stands behind, in the same way it holds a current audit.

Independent should mean prepared by a party other than the sponsor and its staff. Where the conclusion is an opinion of market rent, it should meet USPAP and be signed by a certified or licensed appraiser on the ASC National Registry, which is the standard CGL 2018-3 already sets for federally obligated airport property. Where the conclusion is a rates-and-charges methodology rather than an appraisal, it should be prepared by a qualified aviation rate consultant and should state its methodology and its data on its face.

The independence requirement is the substance of the recommendation, not a formality. A sponsor that sets the rate and also certifies that the rate is reasonable has reproduced, inside its own administration, the circularity described in Section 4. Nothing about a sponsor’s good faith solves that. The person concluding on the market has to be someone other than the person setting the price.

Cadence should be five years, with three years for the largest fields. That is not an invented interval. Paragraph 12.3.b(4) already expects periodic adjustment on leases beyond five years. The Florida DOT guidance that CGL 2018-3 quotes for its own definitions contemplates reappraisal every three to five years. Airport ground leases themselves commonly specify reappraisal at three to five years in metropolitan markets and five to ten in rural ones.⁵⁶ And the sponsors that already commission studies voluntarily run at roughly this interval: the Metropolitan Airports Commission’s 2023 market rent update was the second revision of a 2004 original.⁵⁷

Contents should be specified, because an unspecified requirement produces a work product that satisfies the letter and answers nothing. At a minimum the study should state: current rates by unit class and the basis on which they are quoted; units, occupancy, and waiting list depth by class as of a stated date; the comparable set and the sponsor’s stated reason for selecting it; at least one reference point outside the administered universe, per 10.4; and an explicit conclusion on whether the sponsor’s current rates sit at, below, or above the study’s market conclusion, with the magnitude stated.

That last item is the one that matters. A rent study that concludes on a market rent without saying how far the sponsor’s own rate sits from it has not answered the question the sponsor needs answered.

10.2 Scale the requirement, so small sponsors are not priced out of compliance

Two tiers.

Above a threshold set by rulemaking with comment, a sponsor obtains its own study.

Below it, participation in a state, regional, or multi-airport survey satisfies the requirement, provided the survey is independently prepared, covers the sponsor’s own rates and unit classes, and reaches a market conclusion rather than reporting a range. Several state aviation offices already run exactly this instrument.⁵⁸ Nothing needs to be built; what is needed is that participation count.

The threshold should be set on hangar inventory or aeronautical revenue rather than on enplanements, because enplanement-based thresholds are what currently exclude general aviation airports from federal financial reporting altogether.

10.3 Make the study the vehicle for the paragraph 17.5 statement

Where the study concludes that the sponsor’s rates sit below its market conclusion, the sponsor files a short statement giving the basis on which it is operating under paragraph 17.5.

No violation should be presumed and no rate change should follow. Three answers should all be acceptable: market conditions at this field do not permit higher fees, with the study’s reasoning; the sponsor has made a distributional choice to keep rates accessible to based general aviation and accepts a queue as the consequence; or the sponsor is adjusting on a stated schedule.

The second answer is the honest one at many airports. It is defensible under the Order, and today no sponsor is asked to give it.

This is where the two halves of the recommendation meet. Paragraph 17.5’s permission rests on a factual proposition about market conditions. An independent rent study is a factual proposition about market conditions, produced by someone with no stake in the answer. The exception acquires the evidentiary basis it was drafted to require and has never had.

10.4 Reissue Compliance Guidance Letter 2018-3 as the scope-of-work standard

Four amendments.

Correct the worked example, where the printed $8.70 output should read $0.87 for the printed $10 input.

Update the citation to Order 5190.6B, cancelled in February 2026.

Extend the letter’s stated scope from sale and disposal to periodic aeronautical rent studies. Practitioners already use it that way, because it is the only FAA appraisal guidance there is, and the Haney remedy applies it to a hangar rate. The document should say what it is being used for.

And where a comparable set is drawn entirely from federally obligated sponsors, require the analyst to disclose that and to support the conclusion with at least one reference point outside the administered universe: a return-on-cost test at current construction cost, a merchant or institutional development benchmark, or an alternative-use test on the underlying land. The letter’s own return-on-value formula supplies the first of these already. It is simply not required.

The instruction to compare against other airports should remain, because it solves a real problem. It should be paired with a requirement to demonstrate once that the result is more than the average of a set of administered prices.

10.5 Review the study, not a database

Paragraph 17.8 directs FAA staff to investigate general aviation fees on evidence of substantial revenue surplus accumulation. That instrument cannot detect a sponsor pricing below cost, which generates no surplus by construction.

Where a sponsor has no current study on file, or has one whose conclusion it has not addressed, the Office of Airport Compliance should be able to ask about it on its own motion, as it can under Part 13.

This asks the agency to review a document, which is work it already does and already knows how to do. It does not ask the agency to build a rent series, maintain one, or defend one. Nothing here constrains what a sponsor may charge.

It is also lighter than the current alternative. A scheduled review of an existing study costs the agency less than a Part 16 proceeding, and it arrives before the rate dispute rather than after it.

One consequence is worth noting without making it a sixth recommendation. Rent studies commissioned by public sponsors are public records in most states, and the ones cited throughout this paper were retrieved from sponsors’ own websites. A requirement that these studies exist would produce, without any federal collection program, the regional benchmark that appraisers currently reconstruct from scratch on every engagement.

11. A Research Agenda

The studies required under Section 10.1 would, as a byproduct, produce the first comparable record of hangar rates, occupancy, and queue depth in this market. Each prediction below is falsifiable against that record. None of them is a reason to require the studies, and none is offered as one.

P1. Rate staleness predicts queue depth. Waiting list depth relative to inventory increases with years since the sponsor’s last rate adjustment, controlling for based aircraft, metropolitan proximity, and airport size. Testable from the studies required under 10.1, each of which states the date of the sponsor’s last rate adjustment and the queue depth by class.

P2. Rate responsiveness predicts supply. Airports with an automatic escalation mechanism exhibit greater growth in hangar square footage over a ten-year window than airports with discretionary rate setting, controlling for land availability and federal grant receipts. Testable from the studies, which state the escalation mechanism in force.

P3. The within-class effect. Within a single airport, the segment with higher rent per square foot exhibits shorter queues relative to inventory. The airport fixed effect absorbs land, entitlement, and funding constraints. The critical specification detail, from Section 6.2, is that provision mode must be included: if the effect disappears once sponsor-owned and privately owned units are distinguished, the price mechanism is not doing the work. Testable from the studies, which cover the sponsor’s own unit classes and their tenure.

P4. Comparable-set anchoring. The dispersion of administered rates within a region is lower than facility characteristics and local demand heterogeneity would predict. This is the test of Section 4, and the studies do not reach it, because it requires rents at non-obligated private airfields, which Section 3.6 established are not published. It requires primary collection by interview or survey, and remains the harder of the two data problems.

P5. Ground rent enters loss given default. In an expanded version of the recovery dataset described in Section 8, using the ground rent variable that was collected and never reported, higher contract ground rent relative to a market benchmark is associated with lower recovery. The predicted sign is negative, and it runs opposite to a hangar-rent-suppression story, which is why the two must be tested separately. Lender protective advances must be decomposed out of the claim denominator first, since ground rent payments made by the lender sit inside it and would produce the predicted sign mechanically. Testable now by anyone holding the dataset.

P6. Private development locates where retail rates are unadministered. New private hangar development is disproportionately located at airports where the sponsor ground-leases rather than owns and operates hangars, controlling for demand. Testable from the studies, combined with published development announcements.

Four of the six become testable once the studies exist, one is testable today by anyone holding the recovery dataset, and one requires primary collection that no version of Section 10 supplies.

12. Conclusion

The FAA built a permissive rate regime for aeronautical property on purpose. Reasonableness outranks self-sustainability, fair market value is a ceiling rather than a floor, fees may run below cost recovery where market conditions require, and staff are directed to look at general aviation fees only where a revenue surplus has accumulated. Those are deliberate choices, made to protect aeronautical users from a landlord they cannot walk away from, and this paper does not argue for reversing them.

Paragraph 17.5 is narrower than that. Its permission turns on a proposition about market conditions at a particular airport, and that proposition is never stated, never documented, and never checked. At an airport carrying a four-hundred-name waiting list, it is contradicted by the sponsor’s own records. Whether a higher fee would drive aeronautical activity away is a real question with a real answer at each field. No one asks it.

The reason no one asks is that nobody is required to. The FAA holds no hangar rent, occupancy, or queue data, and it does not need to. The sponsor is the party in a position to know, and the sponsor is the party the exception belongs to. What is missing is any obligation on that sponsor to find out from someone other than itself. The agency’s own remedy when a hangar rate problem surfaces is to order the sponsor to commission an appraisal with a scope of work acceptable to the Director. That instrument works. It arrives after a complaint, once, at whichever airport happened to draw one.

What follows is visible without new data. Private development of the corporate segment requires roughly thirteen percent on cost while public sponsors underwrite the same structure at one to two. Queues persist at a large majority of the airports AOPA’s volunteers serve. The revenue forgone does not reach the flying public as a class; where hangars are rented it dissipates in the queue, and where they sit on ground leases it capitalizes into a leasehold and is sold at market to the next holder. And when a sponsor finally corrects a decade of deferral in one step, it draws an investigation, which places the penalty on the sponsor that waited longest rather than on the one that never moved at all.

None of this establishes that rates should be higher. At many fields a queue is a defensible choice, and Section 7.2 states what the alternative would cost the owners who would be priced out. It is a choice, though, and it should be made rather than inherited.

The recommendation is to run that instrument on a schedule instead. One independent rent study, on a fixed cycle, from a firm the sponsor does not employ, concluding in writing whether the sponsor’s rates sit at, below, or above the market and by how much. For the smallest fields, a place in a state survey that already exists. Nothing collected federally, nothing published federally, and no constraint on what any sponsor may charge.

What it produces is a sponsor who knows the answer, and a file that says so.

An exception no one has to justify is not an exception. It is the rule, arrived at by default.