Tip of the Week: Keep Your Fuel Margins Closer
/By John L. Enticknap and Ron R. Jackson
Aviation Business Strategies Group
Last week, our blog post discussed how keeping your customers close by diffusing disputes at the point of transaction made for good business. For this post, we’ll discuss how keeping your fuel margins closer makes good business sense. It’s really kind of a parody of the famous line from the film, “The Godfather: Part II,” “Keep your friends close and your enemies closer.”
At first blush, keeping your customers close and your margins closer are two axioms that don’t seem to go together. What does one have to do with the other? The answer is simply that each day FBO operators must keep their fingers on the pulse of their operations. Keeping customers happy is just as important to the bottom line as keeping track of fuel margins and managing closely what’s in the tank.
As we all know, a healthy fuel margin is hard to come by these days. On one hand you have savvy aircraft operators who fly more fuel-efficient aircraft, tanker fuel from their own fuel farms and ask for aggressive fuel discounts when purchasing fuel.
On the other, you have the fuel brokers with their own sets of customers, negotiating significant fuel discounts off the posted price and taking a piece of the action while cutting deep into your margin.
And then there’s the airport authority wanting to increase into-plane fees while planning to add another competing FBO at the airport, even though fuel sales have been relatively flat for the past seven years.
Sound familiar? It’s enough to make most FBO operators say, “Enough is enough!”
FBO operators should know and manage the cost of each fuel load that is in the tank farm and be able to adjust their posted price accordingly while remembering to keep their target margin consistent.
Therefore, this should be your daily mantra, “Today, I will keep my customers close while remembering to keep my fuel margins closer.” It’s just good business sense.
About the bloggers:
John Enticknap has more than 35 years of aviation fueling and FBO services industry experience. Ron Jackson is co-founder of Aviation Business Strategies Group and president of The Jackson Group, a PR agency specializing in FBO marketing and customer service training. Visit the biography page or absggroup.com for more background.