Want to Deliver a Better Customer Service Experience? Start with External Operational Audits

By John L. Enticknap

What does an external audit program have to do with delivering a better customer service experience? Let’s explore the possibilities.

One of the most popular events at the National Air Transportation Association (NATA) FBO Success Seminar, conducted by the Aviation Business Strategies Group, is a discussion on lowering FBO insurance rates through better operations management. This includes training the CSR and executive staff on safety, customer service, technical procedures and practical application of quality aircraft ground handling techniques.

­­As part of the seminar, we discuss having a good “insurance story” – which essentially tells your insurance agent how the FBO strives to be proactive in preventing costly mishaps. It all starts with a comprehensive safety and training program. Your “story” includes the positive efforts of proper training with programs such as NATA’s Safety 1^st. 

One element of your safety program is an internal or self-audit of: your training, standard operating procedures, ramp operations and fuel quality control. Internal or self-audits are a positive part of your standard operating procedure. However, as you are aware, your FBO also is subject to external audits from airlines, FAA, airports and your insurance carrier, among others. 

Suffice to say, self-audits are necessary, but are not enough. When you do a self-audit, the problem is, you have a built in “human fudge factor”. It’s like giving yourself an annual physical and pronouncing yourself fit, instead of going to the doctor. 

Therefore, external operational audits need to be a part of your standard operating procedures and not just under the line service section. External operational audits also need to be a part of your Customer Service Program. Yes, we said Customer Service Program. What better way to demonstrate to a customer that you are concerned about their total customer service experience than by delivering: 

• Excellent marshaling of their aircraft
• Parking directions
• Proper chocking
• Ramp safety cones
• Marshaling into hangars with two wings walkers
• Fueling the aircraft with wing mats, without fuel spills, with the proper amount
• And yes, with the proper grade of fuel 

Superior customer service is all about earning the customer’s trust in your operation. It is not just about the fancy FBO facilities, or the smiles and pleasant greetings at the front counter. It’s also about your ramp operation and the customer’s perception that their aircraft is secure and out of harm’s way. 

External Audit Programs are the best way to assure your operation is running in accordance with your high standards. Not only safe operations, but conducting operations in such a manner that the customer has confidence that you’re doing things right! Some of the benefits and advantages of external audits include: 

• Providing a true validation of your internal or self-audit program
       – Self-audits are not enough
       – Need an unbiased ‘third party’ audit
       – Eliminates ‘fudge factor’
• You become a more efficient and safe FBO
• Verifies your Standard Operating Procedures
• Follows-up and benchmarks your training programs
• Keeps you in compliance with regulatory standards
• Enables you to establish a Safety Award Program
• Helps build a positive insurance story for your  brokers
• Can result in lower premiums, less costly accidents 

So, what kind of external audits should you conduct and who should you hire to complete the program? Having done numerous audits over the past several years and recently completed the NATA Accredited Auditor Training, my recommendation is to hire someone with proven experience and good references.

One of the newest audit programs available is the NATA Safety 1^st Ground Audit Standard. This program has two primary objectives:

1. To create a consistent operational safety standard for FBOs, airports, and others while increasing the overall safety level of these operations.
2. To provide on-demand charter, fractional and corporate aircraft operators with an alternative to costly proprietary audits of FBOs, airports and others.

So what does the Ground Audit cover? The audit screens seven separate operating areas within an FBO: Management Systems, Safety Management Systems & Quality Assurance, Training, Standard Operating Procedures, Security, Occupational Safety & Health and Environmental Policies & Procedures.

Who conducts the audits? NATA Safety 1^st manages the audit standard, but does not actually conduct the audit. For third party external audit certification, the FBO contracts with a NATA Safety 1^st trained Accredited Auditor. You may also do a self-certification, but the Accredited Auditor must be trained by NATA Safety 1^st.

For more information on this program visit www.nata.aero/groundaudit.

In conclusion, here is a recap of benefits from conducting an external audit: 

1. Safety. Not only for the customer, but for everyone involved in delivering the end product.
2. Better Customer Service Experience. A customer watches how an FBO works and determines, through perception, whether or not the FBO is taking care of business.
3. Lower Churn and Better Margins. A happy customer is a loyal customer. One willing to recommend your FBO, and also willing to pay a higher price to receive a better product delivered in a professional way.
4. Benchmarks Your Deliverables. Quality external audits will help measure your success in delivering a quality customer service experience. Utilized consistently, it will provide a benchmark for your service deliverable. It will reveal whether or not you’re on the right track - that your systems are operating well and if quality control is being maintained to its highest level. 

Tell us what you think!! E-mail us at jenticknap@bellsouth.net 

Accredited Auditor

Look for our next FBO Success Seminar in September 2012—Dallas, TX

http://nata.aero/Event.aspx

Ron Jackson
Ron is Co-Founder of ABSG and President of The Jackson Group, a public relations agency specializing in aviation and FBO marketing. He has held management positions with Cessna Aircraft and Bozell Advertising and is the author of Mission Marketing: Creating Brand Value and co-author of Don’t Forget the Cheese! the ultimate FBO Customer Service Experience. 

John Enticknap
John founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including as president of Mercury Air Centers. He is the author of 10 Steps to Building a Profitable FBO and developed NATA’s acclaimed FBO Success Seminar Series. 

NATA’s FBO Leadership Conference: A Gathering Worth Attending!

By John L. Enticknap

 Take the attitude of a student, never be too big to ask questions, never know too much to learn something new.          —Og Mandino 

As a principal of Aviation Business Strategies Group, I’m always tuned into the FBO industry and attend various workshops and seminars to keep abreast of our ever-changing industry.

At the National Air Transportation Association (NATA) Leadership Conference and Day On-the-Hill, which I just returned from, I had the opportunity to rub shoulders with more than 200 industry leaders and get a sense of what is happening to the FBO business on a macroeconomic scale.

As a result, I’m ever more convinced that our industry is heading down the right road to economic recovery, with the caveat that a few steep hills have been placed in our path which from time to time may obstruct our visibility.

High Price of Fuel

One of the biggest obstacles we all face is the uncertainty of the price of fuel, the topic which dominated most of the conversation. We’ve all seen the run up in fuel costs in the last six months—it’s having an effect!

Avgas is now over $5 a gallon. Jet A will go up this coming week to $3.26, from $2.90 GCPM in December. Our flying community continues to feel the strain. The FBOs we talked to, in general, have seen a flat first quarter. The good news is most FBOs have seen their fuel uplift grow since the down trend of 2008/2009. However, the business has since flattened out. Most do not foresee any major growth this year because of the continued price pressure. 

During the Thursday morning seminar, “Oil Company Perspective”, it was very interesting to hear the discussions on fuel supply, both avgas and Jet A. 

With regards to avgas, the suppliers reaffirmed availability is OK. However, as they noted, only a limited number of refineries in the U.S. make avgas, and there is only one supplier of the lead that is used in the refining process. That vendor has assured the aviation community they will continue to make the lead additive. 

On the horizon, however, is the issue of lowering or eliminating the lead from avgas. Then there is the recently filed lawsuit, “Friends of the Earth” vs. the EPA. 

In addition, there is the lawsuit that was filed in California. NATA is already involved and assisting our members. This all adds much uncertainty to the future of avgas for high performance piston engines. For the short term we’re OK, but the future is not clear at this point.

Jet A is not in short supply, but is under pricing pressure from the same factors as overall mogas price speculation and other petroleum products. There are regional price differentials due to a number of factors, according to the oil company speakers, among them Marty Hiller from World Fuel, Joel Hirst from Avfuel and Bryan Faria from ConocoPhillips. 

Of particular note was the information that in North Dakota there is an excess of crude due to recent successful exploration. In addition, there is plenty of crude from other new sources in the U.S. Therefore, pricing of fuel today is not related to crude issues today. 

The fuel suppliers further discussed the FBO fuel marketplace, and the consensus is fuel costs will remain relatively high. Corporate customers are going to continue to seek contracts and discounts from posted pricing and, most of all, good value. 

The European FBO business model, where FBOs charge a la carte fees, will not be a major factor for American FBOs. 

Customer Service Training 

The Disney Institute gave a presentation on customer service which was one of the highlights of the conference. Experienced managers had a chance to hear and learn from one of the premier customer service providers in the country! 

All the attendees know that customer service is the real differentiator when it comes to good FBOs vs. great FBOs. If you missed this seminar, we strongly recommend you attend one in your city and train all your staff on Customer Service. It’s key to your success. 

A couple of thoughts we’ll pass along are about the use of name tags. All your employees should have a quality name tag, with their first name being prominent and including the city where they live. The tag should be engraved with your logo and your Unique Value Proposition or UVP. And always use the customer’s name when you engage them. 

Day On-the-Hill

More than 100 of the attendees also were part of the Day On-the-Hill. We met with our respective House and Senate representatives and discussed the prominent political issues affecting our industry. I encourage you to talk to your U.S. Representatives. Since they are up for re-election this year, they should listen. Talk to your Senator as well. Many of them are also up for re-election.  Some of the issues we discussed included:     

• Fuel Fraud Provision
• Freedom from Government Competition Act
• Temporary Flight Restrictions
• Large Aircraft Security Program
• Flight Management IRS Excise Tax 

If you need help, contact NATA and talk to Eric Byer, Vice President, Government & Industry Affairs. 

This conference was well worth the time for the attendees. The best feature was the opportunity to be able talk to our peers and learn from each other. The FBO business is a dynamic and ever-challenging business. NATA provides a unique forum to allow us to enjoy our great aviation heritage and opportunity. We are all aware of the upcoming changes in the leadership at NATA and trust the future will allow our organization to continue to flourish.

Congratulations to all the award winners. Attendees toasted the industry's best at NATA's annual Industry Excellence Awards dinner and presentation. Top honors went to Mary M. Miller, Vice President, Industry & Government Affairs for Signature Flight Support/BBA Aviation; and Kenneth C. Ricci, Chairman of the Board of Flight Options and CEO of Nextant Aerospace.

Thanks and look forward to hearing from you.  Send your comments to John L. Enticknap   jenticknap@bellsouth.net

Ron Jackson
Ron is Co-Founder of ABSG and President of The Jackson Group, a public relations agency specializing in aviation and FBO marketing. He has held management positions with Cessna Aircraft and Bozell Advertising and is the author of Mission Marketing: Creating Brand Value and co-author of Don’t Forget the Cheese! the ultimate FBO Customer Service Experience. 

John Enticknap
John founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including as president of Mercury Air Centers. He is the author of 10 Steps to Building a Profitable FBO and developed NATA’s acclaimed FBO Success Seminar Series. 

Improving FBO Productivity in 2012: Business Strategies for Better Success

(Part 3 of a 3-Part Series: Planning a Successful 2012 FBO Business Strategy)

By John L. Enticknap and Ron R. Jackson

 Productivity is never an accident. It is always the result of a commitment to excellence, intelligent planning, and focused effort.          —P. J. Meyer 

In the first two installments of this three-part series, we discussed “Our FBO Business Outlook for 2012”  and “Decreasing FBO Costs in 2012.” In this third part of our series we discuss ways to improve FBO productivity in 2012.

First of all, the key to executing any business initiative is to set realistic and achievable goals supported by workable strategies to accomplish these goals. As the P.J. Meyer quote suggests, intelligent planning and a focused effort are required. Here are three goals and supporting strategies we recommend to put you on the right productivity track for 2012:

1. Increase Line Service Productivity
        a.  Avoid ramp and hangar mishaps
        b.  Create a credible audit system
        c.  Increase fuel sales at point of connection
2. Produce Better Financials 
        a.  Fine tune your financial dashboard
        b.  Watch your fuel margins
        c.  Cash flow analysis and financial ratios
3. Build Long-Term Profitable Customer Relationships
        a.  Be the restaurant owner
        b.  Communicate your Customer Value Proposition
        c.  Don’t forget the Cheese

Goal No. 1: Increase Line Service Productivity
Strategy a: Avoid ramp and hangar mishaps  

In the FBO business, there is perhaps nothing more perplexing than a mishap on a ramp or in a hangar involving a customer’s aircraft. It not only costs the FBO money and possible loss of business, it costs the customer valuable time and causes, needless to say, customer dissatisfaction. 

The truth is, most mishaps can be avoided through proper training and adherence to a comprehensive Standard Operation Procedure (SOP) manual or document. Initial line service training and diligent recurrent training programs are essential. Following simple rules such as always using multiple wing walkers, especially in hangar situations, is vital. We recommend the NATA Line Service Training (LST) program as a great way to train your line service employees. 

Strategy b: Create a Credible Audit System

As we noted previously, extra training keeps ramp and hangar mishaps to a minimum.  However, we need to make sure training and management systems are monitored, utilized and policies and procedures maintained. An internal audit is one way to evaluate your training programs, but it’s hard to eliminate bias.  Only an external audit can give you a true benchmark measure of policy adherence and performance.

There are a number of qualified professionals you can hire to evaluate your training programs and review OSHA compliance as well as environmental, SPCC plans and other internal/external operational procedures. In addition, an outside audit can verify and establish your business’s credibility with your insurance underwriters, which can often result in lower premiums. It also aids in keeping your line service team sharp and focused on safety and quality.

Recently, NATA established an industry-leading Ground Audit program. It is a nationally recognized audit program developed by and for the FBO industry. It uses trained and accredited auditors, including this blog post’s co-author John Enticknap. It’s a good program, but not easy to qualify for or complete. You may want to be one on the first FBOs to register and use it in your marketing campaigns.

Strategy c: Increase Fuel Sales at Point of Connection

Since your line service personnel are often the first FBO employees to come in contact with customers, they all should take part in any customer service training afforded to Customer Service Representatives (CSRs). In addition, they should be totally aware of any fuel promotion you have in place and should be capable of “suggesting” extra fuel at perhaps a volume discount.

Once you have your refueler hooked up to the aircraft, there are no additional fixed costs. Therefore, this is a great opportunity to pass along a fuel volume discount and add more fuel to the sale. Incremental sales of this type really add up and help improve the bottom line.

Goal No. 2: Produce Better Financials
Strategy a: Fine tune your financial dashboard 

When you review your daily sales and productivity reports or dashboards, do you act on the information or just take it in stride? You should make sure the reports are giving you the information you need to make your business more efficient. 

When you review your maintenance shop productivity, do you make sure the numbers match your targets? If you want 89% productivity from your technicians and don’t achieve it, even for a day, do you act on the information? If you lose even a few days out of the month, it’s easy to lose a month of reasonable profitability. 

It’s the same thing on your fuel sales. If you’re having a soft month, run a fuel promotion. Use some demand pricing to stimulate sales.

Strategy b: Watch your fuel margins  

During our NATA FBO Success Seminar we talk about fuel margins. This is no doubt one of the most popular subject matters at our seminars! Without a decent fuel margin your business doesn’t go anywhere. 

With requests or demands for lower prices from your customers and contract fuel programs, there is increased pressure on your margins. We would like to recommend you institute our $2.00 management plan, another strategy we teach at our NATA FBO Success Seminars. 

It works like this. When you price your retail Jet A fuel, set a two dollar margin as a goal. For example, in today’s market the price build-up would be approximately $3.30 GCPM-Platts—plus 65 cents for Federal taxes, transportation, and flowage fees, etc.—plus a $2.00 margin.  Therefore, the total retail price would be $5.95. Most FBOs are above this retail market price already!  Remind yourself, every time you have to spend $2.00 on overhead, you have to pump another gallon of Jet A. We suggest you keep a $2.00 bill on your desk to stay focused! 

Strategy C: Cash Flow Analysis and Financial Ratios 

We think it is fair to say most of your financial reviews involve looking at your profit and loss statement and balance sheets.  As a reminder, you should also look at your Cash Flow Statement. This statement summarizes the operating, investing and financing activities of your business as it relates to inflow and outflow of cash. This translates to either positive or negative cash flow. With a focus on liquidity rather than profitability, it’s one of the single most important financial tools for your business.  The statement provides a clear picture of how quickly cash is leaving the business compared with how promptly it is coming in.  Have your bookkeeper/accountant provide this statement at least monthly. 

There are two types of financial ratios which generally measure two areas within a company:

• Liquidity ratios indicate your company’s ability to meet current obligations on time. With problems in this area, you have trouble paying your bills on time. It helps identify needs for more capital, more sales, better management or all of the above.
• Profitability ratios measure your performance regarding your ability to generate revenues, net income and acceptable return on investment. 

These are handy tools to use in your business to spot trends both good and bad.  With these tools, you can have a better handle on cash management and forecast the effect on operations and profitability. 

Goal No. 3: Build Long-Term Profitable Customer Relationships
Strategy a: Be the restaurant owner 

In a previous blog, we discussed in length the concept of being the restaurant owner in managing your FBO business.  Simply, this means getting out from behind your desk and managing by wandering around.  Observe the workings of your FBO first hand. Praise your employees for the job they are doing. 

But most importantly, just like the restaurant owner, meet and greet your customers from time to time. Show your CSRs and Line Service personnel, by example, how to create long-term profitable customer relationships by listening to the customer, calling them by name, and above all, thanking them for their business. 

Strategy b: Communicate your Customer Value Proposition 

Do you know what your Customer Value Proposition (CVP) is?  It’s basically what you would tell someone about your business in a short ride on an elevator.  It’s usually no more than a sentence, but it becomes your business mantra, your call to action. 

As an example, here is one we developed for one of our clients, Heritage Aviation in Burlington, VT: 

At Heritage, we are committed to quality service, the comfort of our customers 
and a safe environment for their aircraft…and that’s Service You Can Fly On! 

Not only is the CVP important for customers to understand, it also serves as a short, daily reminder about the level of service and commitment requested of all employees. In other words, it’s a service standard. Don’t be afraid to display the CVP in your FBO, publish it on your website and post it on your Facebook page. 

Strategy c: Don’t forget the Cheese! 

One of the customer retention strategies we touch on at our FBO Success Seminar is the concept of developing a memorable way for FBO employees to deliver an exceptional customer service experience. While most FBOs don’t tolerate mishaps on the ramp, why should they tolerate miscues with customers? 

By standardizing your customer service training, you can consistently meet the needs of your customers, increase retention, and build the long-term profitable relationships you value. 

At Aviation Business Strategies Group, we’ve developed a standardized training approach we call Don’t Forget the Cheese!  

Simply, it’s a memorable way to help employees remember to do the simple things, like smile, even when they answer the phone; be professional yet personable; and above all, add a little something extra to each transaction. That’s the power of not forgetting the cheese! 

Read Part 1: Our FBO Business Outlook for 2012
Read Part 2: Decreasing FBO Costs 2012

Let us know what you think!  Please email John Enticknap at jenticknap@bellsouth.net or Ron Jackson at ron@thejacksongoup.biz. 

Ron Jackson
Ron is Co-Founder of ABSG and President of The Jackson Group, a public relations agency specializing in aviation and FBO marketing. He has held management positions with Cessna Aircraft and Bozell Advertising and is the author of Mission Marketing: Creating Brand Value and co-author of Don’t Forget the Cheese! the ultimate FBO Customer Service Experience. 

John Enticknap
John founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including as president of Mercury Air Centers. He is the author of 10 Steps to Building a Profitable FBO and developed NATA’s acclaimed FBO Success Seminar Series. 

Decreasing FBO Costs in 2012

Cash Flow and Controlling Expenses—Managing Your Business
(Part 2 of a 3-Part Series: Planning a Successful 2012 FBO Business Strategy)

By John L. Enticknap, Aviation Business Strategies Group

 The buck stops with the guy who signs the checks.
                                                                —Rupert Murdoch 

In the first installment of this series, we discussed our FBO Business Outlook for 2012. At the recent NBAA Schedulers & Dispatchers Conference held in San Diego, we had a chance to discuss this outlook and the current business climate with a number of FBOs in attendance.

Many we talked to agreed with our forecast of a slow uptick of around 2.5 percent average industry growth in 2012, with some individual FBOs experiencing up to 5 percent growth or even possibly more.  We met a number of FBO owners and managers who indicated they were ahead of the 2.5 percent growth rate for 2011 and expect to do better than the 5 percent growth projection for 2012.  And of course, some indicated 2011 was a flat year and they didn’t expect to do much better for 2012.

For this installment, part two of our three-part series, we want to discuss ways FBOs can better manage and even decrease their costs in 2012.

At our National Air Transportation Association (NATA) sponsored FBO Success Seminars, we talk in-depth on ways to generate more bottom line revenue. From growing fuel margins to lowering credit card interest rates, we analyze every operating element in order to maximize the efficiency of each transaction.

The basis for these seminars is our Aviation Business Strategies Group proprietary 10 Steps to FBO Success. You can review these steps on or website www.ABSGGroup.com.

For the purpose of this blog post, we will concentrate on the subject of Cash Flow.

Cash is King

Most business managers or consultants will tell you , “in my opinion, your business can increase cash flow by 5 to 10 percent by reducing operating costs.” Or maybe the “big boss" simply tells you to reduce costs—then walks away!!

The obvious way to do this is to cut overhead and the easiest way to cut overhead is to cut back on the number of employees. However, if you read one of our earlier blogs on this subject, you would understand why this is not such a good idea. 

Instead, let’s look at your cash flow situation as one way to better manage your costs. Not to overstate the obvious, but cash is king. Without cash you can’t pay your employees or pay your bills! And depending on your credit situation with your fuel supplier, you may have to pay cash for your fuel deliveries.

Interestingly, a survey completed in 2009 by Intuit (the software company that makes QuickBooks) indicates that 22 million small businesses have overdue accounts for at least $1,500. That equates to 33 billion dollars in overdue cash!!

Cash Flow Case Scenario

Consider a hangar tenant with an overdue payment of $2,500 for a one-month rental. However, the tenant has not paid their hangar bill for 60 days and you’re now owed $5,000.  (To make things worse, in good faith, you originally gave the customer a discount on the hangar in exchange for fuel sales this new customer would generate.)

Your accounting procedure calls for 30-day terms but you really didn’t worry about the bill until it hit the 60-day period! So after 60 days you are really owed $7,500 because you’re tenant is now behind two months, plus the current month you just billed. By the time you collect the original $2,500, the overdue amount can easily be five to six months past the original due date, which means the amount due should really be $15,000. Overdue accounts mount up fast!!

No one wants to offend a customer, or so goes the conventional wisdom. But we need to get over that notion. It is outdated and not part of today’s competitive business environment. You may fear hurting the feelings of those who owe you money, but you don’t need them for new business. That’s because they haven’t even paid for the old business! A business transaction is not completed until you get paid and the money is in the bank.

So what do we do about our overdue hangar tenant? As the owner of a multimillion dollar aircraft, one would think our hangar tenant is a business savvy corporate owner and is familiar with large financial transactions, borrowing money, and paying on time. So find out who pays the bills. Most likely it is not the pilot, although he may approve them.  Talk to the CEO or the CFO, the person who signs the checks. It does no good to just talk to the pilot, who has no authority to sign the check. Just like our quote from Rupert Murdoch—the buck stops with the guy who signs the check!

Don’t be concerned with threats like “I’ll take my airplane to your competitor,” or ”I won’t buy any Jet A,” or “I’m leaving,” etc. This so-called customer is not really a customer because they don’t pay their bills.  By the way, they’re most likely not purchasing any fuel either.  If you have to, park the aircraft in the back of the hangar and demand full payment with a certified check or wire transfer. You can then move on to the better customers who value quality service at a fair price. 

Want an idea to get attention for overdue bills? Rather than send these delinquent customers a regular overdue invoice notice, send them a vacation-style postcard. Put on it, “Wish we were here, but we can’t afford it since you haven’t paid your bill.” The card is public while it goes through the mail system of the company—it will get attention.

Collect your money—stay in business for the real customers.

Expense Management

How about expenses? It’s easy to say, let’s cut 10 percent!  I’ve had bosses tell me that, or call me and say, “cut 5 percent of your employees.” This is no way to run a business.

When it comes to expenses, look at Zero-Based Budgeting. Zero-based budgeting requires that your budget requests be re-evaluated thoroughly, starting from the zero-base. This process is independent of whether the total budget or specific line items are increasing or decreasing.

Another tool is to competitively bid all your expenses. For example, simple office supplies purchases. Put a list together of what you need and send an e-mail or fax to all your local suppliers, like Office Depot, Office Max, Staples or better yet, your local small business office supply firm. They all want your business.

Note: Take the lead from your own customer base. Aren’t they seeking the best deal on fuel prices every day? You need to do the same thing with your vendors.

Here are a few actions you can take to cut expenses and maximize yours profits:

• Put your own expenses up for competitive bids and use your best judgment
• Create a monthly expense budget and stick to it
• Never let expenses become routine
• Benchmark your expenses to see trends from various vendors
• Put systems in place to control expenses
  • Set approval levels by expense category and employee
  • Set the authority to approve all expenditures
• Watch expenses by adding and tracking three key financial metrics weekly in your flash report
  • Cash Balances
  • Payables Balances
  • Receivables Aging 

Management Flash Reports

Now let’s talk about your Flash Report, Dashboard or Daily report, whatever you call it. First and foremost, you should have a Dashboard Report you can refer to in order to get real-time information on the metrics of your business. We discuss this in detail in our FBO Success Seminar.

Your report should include fuel pumped on the previous day, MTD and Budget MTD. It should also include the productivity of your maintenance shop, charter department and flight school. In addition to the financial metrics we mentioned above, you can include other easy to print reports from your accounting system. Let your bookkeeper be your “virtual CFO” who can regularly produce these reports—on-demand and without visiting your office.

Are your eyes on the money? If not, how can you be sure that you’re making any?
                                                                                                                —Sam Frowine

Next in the Series:
Part 3: Increasing FBO Productivity in 2012

Read Part 1: Our FBO Business Outlook for 2012

Let us know what you think!  Please e mail us at jenticknap@bellsouth.net 

Ron Jackson
Ron is Co-Founder of ABSG and President of The Jackson Group, a public relations agency specializing in aviation and FBO marketing. He has held management positions with Cessna Aircraft and Bozell Advertising and is the author of Mission Marketing: Creating Brand Value and co-author of Don’t Forget the Cheese! the ultimate FBO Customer Service Experience. 

John Enticknap
John founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including as president of Mercury Air Centers. He is the author of 10 Steps to Building a Profitable FBO and developed NATA’s acclaimed FBO Success Seminar Series. 

Planning a Successful 2012 FBO Business Strategy: A Three Part Series

Part 1: Our FBO Business Outlook for 2012

By John L. Enticknap and Ron R. Jackson, Aviation Business Strategies Group

 Get your facts first, then you can distort them as you please.                                                                                                                                          —Mark Twain 

Recently we received a call from one of the major business aviation publications asking for our outlook for the FBO business in 2012. As writers, practitioners and consultants to the business aviation community, we are often contacted by the aviation trade press for our views on various industry subjects.

We have our ears and eyes glued to the FBO market, and recently completed one of our FBO Success Seminars for the National Air Transportation Association (NATA), so we have a pretty good pulse on the health of the industry.

Looking into the FBO Crystal Ball for 2012

First of all, in today’s political environment—especially with an election year upon us—it’s hard to get a good read on what’s going to happen in 2012 on a national level that will affect our FBO industry either positively or negatively. If you’ve watched any of the debates, you probably think ‘ol Mark Twain hit the nail on the head. You might as well wet your finger and hold it up in the air to see which way the economic wind is going to blow.

We can start by turning our attention to the cost of fuel because it’s one of the most watched components to running an FBO. 

For 2011, the Platt’s (what fuel suppliers use to price Jet A) pricing index at the beginning of the year saw the Gulf Coast Pipeline Mean (GCPM) at $2.4738. By the time December rolled around, the GCPM posting was $2.4866 with the highest price occurring in May, when the GCPM topped out at $3.3239 per gallon. It is interesting to note that in the first week of 2012, the Platt’s index is up a little over 7 cents per gallon. 

For 2012 we think it’s fair to say fuel prices are going to remain somewhat volatile and a range of $2.50 to $3.00 per gallon is going to be the norm. With nothing new to report on that front, expect more of the same general course for 2012. (Of course, a caveat is that the world economic situation needs to remain reasonably stable.)

Outlook for FBO Operations

As to actual operations, the best information comes from the FBOs themselves without all the filters from so-called experts.  As mentioned, we recently completed another effective FBO Success Seminar in November. We gained a wealth of data from a diverse group of more than 25 attendees representing 20 various sized FBOs.

So what did they have to say?

They all experienced a reasonably stable business environment in 2011 with incremental growth in fuel sales as well as solid aircraft maintenance bookings. If you were to benchmark their growth with the National Gross Domestic Product (GDP) index for 2011, you would see similar numbers to what the attending FBOs experienced, which is a 1.9% increase on average.

Historically, the FBO business suffered significant lows in the 2008/2009 timeframe and since that period has seen small but steady growth. Of course, we’re still seeing some industry fallout from those lean and tough years, so keep in mind FBOs will not be getting back to the 2007/2008 business levels in the near term. This, again, tracks national business trends.

The Market for New Aircraft

Another leading indicator for aviation business recovery is industry forecasts for new business aircraft sales. Traditionally the demand for new aircraft picks up when companies operating business aircraft start to fly more hours and thus feel the need to either replace or expand their current fleet.  Obviously, more flying hours equals more airplanes on the ramp equals more fuel sales. So tracking new aircraft bookings is a good idea.

Both Forecast International and Honeywell do not predict business aircraft sales to return to 2008 levels (1,313 units sold) until 2018! However, just for reference, the business aircraft production forecast for 2011 was 683 units with a rise to 728 units for 2012. Again, only a slight uptick, but an incremental increase is better news than a recessionary market.

The companies attending our FBO Success Seminar had similar concerns for the coming new year. They are not expecting anything new or earth-shattering that would help increase business growth.

Other Areas of Concern

Besides a less than robust business environment, the FBO community also has concerns about other areas which might adversely affect their profitability. These concerns include national business trends such as increasing regulations from the EPA and FAA; increasing labor costs including healthcare; and a national election year leading to sustained political gridlock.

In addition, FBOs are concerned about a potential trend of airport boards and authorities getting into the aviation service business and competing against existing firms, or not extending leases with reasonable terms.

So what’s our 2012 FBO business prediction? If your FBO sales increase 5 percent, you are a star! Based upon what the general business trends seem to be, a 2 to 2.5 percent increase would appear to be normal business growth. At the same time, most FBOs will not be adding new employees but instead replacing those lost to attrition. In addition, cost control will remain a high priority as will be increasing productivity. (Stay tuned for Parts 2 and 3 of this series for more on that.)

What about the big FBO networks? In 2011, every chain made some major expansion moves and worked to increase efficiency. (Signature just announced another FBO acquisition as we go to press.) It is reasonable to assume the chains will continue to consolidate the FBO industry. Remember, our national FBO industry includes fewer than 3,000 FBOs while the FBO chains combined represent a group of about 250 locations. Consequently, plenty of acquisition targets remain.

Decrease in Number of FBOs

Another industry trend we should all be concerned about is the continued loss of FBOs within the US. The most recent NATA Fact Book indicated in the year 2009 there were 3,138 FBOs in the US. In November 2010, that number decreased to 2,987. Now, at the end of 2011, there are reports of three more FBOs going out of business and no doubt there will be more to come. Will this be a continuing trend?

As mentioned earlier, there is still fallout from the massive 2008-2009 downturn coupled with the continued unsettled economy. In addition, bank loans have been called, credit has been tightened, leases have not been renewed under reasonable terms, and, to a minor extent, FBO consolidation continues.

Unfortunately, the business pressures FBOs have been under will continue in the coming years and managing a profitable FBO won’t get any easier. However, there are things we can do to affect the bottom line by decreasing costs and increasing productivity. Parts 2 and 3 of this series will discuss these opportunities.

Next in the Series:
Part 2: Decreasing FBO Costs in 2012
Part 3: Increasing FBO Productivity in 2012

Let us know what you think!  Please e mail us at jenticknap@bellsouth.net 

Ron Jackson
Ron is Co-Founder of ABSG and President of The Jackson Group, a public relations agency specializing in aviation and FBO marketing. He has held management positions with Cessna Aircraft and Bozell Advertising and is the author of Mission Marketing: Creating Brand Value and co-author of Don’t Forget the Cheese! the ultimate FBO Customer Service Experience. 

John Enticknap
John founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including as president of Mercury Air Centers. He is the author of 10 Steps to Building a Profitable FBO and developed NATA’s acclaimed FBO Success Seminar Series.