Although FBO fuel sales were mixed in 2016, the industry widely expects sales to increase in 2017, according to the results of the Annual FBO Fuel Sales Survey released today by Aviation Business Strategies Group at the Schedulers & Dispatchers Conference in Fort Worth, Texas.
Nearly one-third of U.S. FBOs responding to the survey reported decreased year-over-year fuel sales in 2016. Meanwhile, 47 percent of participating FBOs reported an increase in fuel sales, Aviation Business Strategies Group principals and AC-U-KWIK FBO Connection bloggers John Enticknap and Ron Jackson say.
Enticknap calls 2016 “a mixed bag for FBO fuel sales. It was bittersweet for the industry as more than 30 percent of the FBOs surveyed showed a decline, yet the very top performers — nearly 20 percent — reported an increase in fuel sales of more than 8 percent.”
He cites two reasons for the mixed results: First, recovery in the hours flown by the business aviation fleet has been slow and incremental. “We need to see a more positive and robust consistency in this metric,” Enticknap says.
“Secondly, many believe the prolonged presidential election cycle caused uncertainty in the economy,” Enticknap says.
With the incremental improvement in hours flown compared to 2015 and the election cycle complete, FBOs surveyed have an overwhelmingly positive outlook for 2017. Ninety-three percent of respondents predict flat or increased fuel sales in 2017, compared to 2016, Jackson says.
“In addition, when asked if the economy was headed in the right direction, a resounding 54 percent said yes compared to just 8 percent responding with no while 38 percent were undecided,” Jackson says. “This is a very bullish outlook going forward.”
By contrast, at this time in 2016, only 27 percent of the FBOs answering the survey believed the economy was moving in the right direction, Jackson says.
Indeed, Enticknap and Jackson note that some respondents cited the election of a businessman who has used business aviation to his benefit for business and in his successful presidential campaign as a good sign for FBOs.
The consultants also shared their own 2017 forecast based on the survey and interviews with FBO owners and aircraft operators. They expect:
- A gradual increase in business aviation flight hours resulting from increased confidence in the economy felt by Fortune 500 companies
Monthly aircraft flight activity increases of 2.5 to 4 percent heading into the third and fourth quarters of 2017
- Corresponding increases in MRO repair and refurbishment orders and avionics upgrades
- Aviation fuel costs to rise with the price of oil and level off while the price of oil settles around $55 to $60 per barrel
- FBOs differentiating their businesses from competition by providing consistent customer service
- Adoption of stronger safety programs and risk management through SMS and IS-BAH programs