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.
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 firstname.lastname@example.org
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 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.