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Thursday
Apr072011

The Cost of Aviation Fuel

Why is the price continuing to increase, and what can an FBO do?

“Business, more than any other occupation, is a continual dealing with the future; it is a continual calculation, an instinctive exercise in foresight.” – Henry R. Luce

We think it’s fair to say we are all feeling the impact on fuel price increases over the last six months or so. As a pilot, I’m seeking the best fuel price and am modifying my flying patterns to get the best deal.

Historically, after an initial spike in oil prices, the market tends to settle down. So why haven’t we seen a stabilization in Jet A fuel prices? What’s causing the volatility in the open and spot fuel markets?

Besides the obvious affects of world events, including the disaster in Japan and political upheaval in the Middle East oil-producing regions, there are other underlying dynamics that contribute to rising aviation fuel prices.

What Others Are Saying

Let’s review a few articles that have been written lately.

As discussed in Charles Kadlec’s article, the current Fed policy of keeping the value of the dollar low in the international markets is one of the main influences. Because it takes more dollars to buy a barrel of oil, the low dollar value pressure drives up the costs. It’s not necessary to review the entire article here, but suffice it to say the continued low value of the dollar is not going to reverse anytime soon.

In the article “Oil Spike Prompts Airline Profit Fears,” the authors discuss in detail the increasing cost of fuel and its effects on the airline industry. The airlines anticipated the increasing cost of fuel to be in the $75 to $90 range, but now a barrel of oil costs more than $108 this week. The economics of the airlines are such that a $1 increase in the price of a barrel of oil will increase the costs to the airlines more than $1 billion in a year.

As a result, the airlines are looking at a $10 billion cost increase in 2011 with fuel costs, on average, representing approximately 29 percent of the airlines’ operating costs. In order to gain back revenue, airline ticket prices are going up. Expect to see more fees and reduced flights with higher load factors.

The NBAA article details some similar statistics. They indicate 20 to 25 percent of a turbine operator’s cost of operation is fuel. The article notes, as we have discussed in previous blogs, that corporate operators are utilizing tactics such as using contract fuel providers, discounts with their base FBOs, tankering fuel and other fuel savings measures.

What Does the Crystal Ball Say?

As Henry Luce noted in his quote, in business we are always trying to look into the future. So looking into the crystal ball, what is going to happen with fuel costs, and what can we do about it? With the continued world unrest in the Middle East, oil prices will probably remain volatile.

The wild card in this equation is the Fed monetary policy. If the dollar remains weak, it’s our opinion the price of a barrel of oil is not going to go down anytime soon. Unfortunately, these factors are also going to slow down the economic recovery.

The bottom line: Just as the airlines are dealing with higher fuel costs, the cost of operating your FBO is going to go up and will probably not get any better soon. You’re also going to continue to see increased pressure on your fuel margin as aircraft operators, faced with their own budget problems, seek to negotiate better fuel prices.

So how do you survive during this fuel crisis? First, you must reconnect with your customers. Get out from behind the desk, and be a pro-active owner/operator. Be the restaurant owner!

Get to know your base customers and your transient customers. Learn their needs, wants and desires. By knowing your customers’ requirements, you can negotiate your own fuel delivery program that is customized to their operating parameters. At the same time, you minimize outside influences and maximize your returns. With regards to transient customers, you should already know who is flying into your location, so meet with them, and negotiate a reasonable service fee program which includes your fuel delivery.

Secondly, remember the Pareto 80–20 Principle.

Generally, the Pareto Principle is the observation (not law) that most things in life are not distributed evenly. It can mean all of the following things:

  • Twenty percent of the input creates 80 percent of the result,
  • 20 percent of the workers produce 80 percent of the result,
  • 20 percent of the customers create 80 percent of the revenue,
  • And on and on.

The Pareto Principle helps you realize the majority of results come from a minority of inputs.

As the FBO manager and chief marketing/sales person, this principle can help you concentrate your efforts by identifying your top customers — the important 20 percent that generate 80 percent of your business. That is the best bang for your buck. Know these folks well. This understanding of the vital few is what will make your business successful, and you can manage the change in cost of fuel.

Remember our premise as we forecast for the future. Concentrate on what you can control in a measured and methodical manner. We have little control over world events or what the Fed is going to do with monetary policy.

How are you dealing with the higher fuel costs? I’d like to know. Please email me at jenticknap@bellsouth.net.

John Enticknap

John Enticknap 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.

Friday
Apr012011

Measuring Your FBO Customer Service Experience

What’s Your CQ™ (Customer Quotient)?

In the recent series on Building Long-Term Profitable Customer Relationships, we talked about what makes a customer loyal (Are You the Restaurant Owner?); the perils of competing on fuel price (Do You Feel Lucky?); and finally, how to deliver the best customer service experience (Don’t Forget the Cheese!)

Now it’s time to measure the effectiveness of all your good work to improve the Customer Service Experience!

Just as a good measure of one’s intellect is the Intelligence Quotient or IQ test, at Aviation Business Strategies Group (ABSG), we have developed the means to test your FBO’s Customer Quotient or CQ™. The results of determining your CQ™ is a good measure on the overall effectiveness of your FBO customer service initiatives.

The Customer Service Survey Tool

The first step in the process of understanding your CQ™ is to develop an accessible and meaningful customer service survey tool. By accessible, we are talking about the convenience of the customer’s access to the survey.

Obviously, you should have it in a printed form and accessible at your customer service desk and perhaps in the crew lounge. For the printed version, make sure the survey is formatted so it can be easily mailed, including a No Postage Necessary Business Reply indicia.

For further convenience, put up a survey box near the exit to the ramp where customers can drop the completed printed survey so they don’t need to carry it with them for mailing at a later date.
In addition to having the survey available at the locations mentioned above, consider including it as part of a customer receipt envelope or holder, similar to the kind of money holder you get when you cash a check at a bank.

Lastly, make the survey accessible online through your company Web site. Just make sure there is a space for the customer to enter the date of service and perhaps a customer transaction number if there is one on the receipt. This will help you determine the validity of the information.

Make the Survey Meaningful

Here are some basic tips to make the survey easy for the customer to fill out and meaningful to you as a true measure of the customer service experience.

  1. Keep it simple and logical. Don’t overthink the questions.
  2. Make the questions relevant. Ask only questions about the service experience.
  3. Keep it short. If you have more than five or six questions, your response rate will be way down.
  4. Make sure you ask the ultimate question: “Would you recommend our FBO?”

The last thing you should do is put together a point value system for each question so you can convert the results into a metric that can be plotted over time. For instance, say you wanted to measure the following where 1 is a low score and 10 is the high score:

  • Quality of line service: Rate 1 to 10 points.
  • Friendliness of staff: Rate 1 to10 points.
  • Cleanliness of facility/restrooms: Rate 1 to 10  points.
  • Pilot amenities: Rate 1 to 10 points.
  • Passenger amenities: Rate1 to 10 points.

With this section of your survey, you could have a potentially high score of 50 points if your customers rated all these items at 10 points each.

Now, let’s throw one last question into the mix. It’s really the most important, so we give it a value of 50 points. Yes, it’s that important! It’s either yes or no. All or nothing!

  • Would you recommend? Yes/No?
    • Yes = 50 Points.
    • No = 0 Points.

The Sum of All Parts

In a perfect world, your customer service experience could potentially score 100 points. In keeping score over time, create a chart using the data obtained for the first five questions.

You may want to do a chart on a weekly basis at first. However, creating a monthly snapshot over a 12-month period will probably give you the best idea of the way your customer service experience is trending.

Then, do a separate chart to keep track of the Would you recommend? question. State the results as a percentage of the amount of customer service surveys returned.

The last thing you may want to do is post the results for all your employees to see. Follow-up with an employee team meeting and encourage feedback from both your customers and your employees regarding how to improve your customer service experience.

©The terms/phrases “Customer Quotient™” and “CQ™” are propriety in their intended use and considered intellectual property of Aviation Business Strategies Group.

Ron Jackson

Ron Jackson 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.

Thursday
Mar242011

Flight Schools: Time to Think Outside the Box

He who would learn to fly one day must first learn to stand and walk and run and dance; one cannot fly into flying.” – Friedrich Nietzsche, 1844-1900

Friedrich Nietzsche, a controversial philosopher for his time, made this statement before the Wright Brothers even flew, so we may assume he was not referring to the business of training people to fly. However, this quote has much relevance to our FBO flight training activities today.

It wasn’t that many years ago that the majority of FBOs were defined as “full-service companies” offering flight school training, new and used aircraft sales, charter, maintenance, hangars, and terminal facilities.

The business model was to market to potential pilots, both professional and recreational, train them, sell them an airplane, hope they would trade up, maintain the airplane, hangar it and, of course, sell them fuel and various services. As the pilot grew in experience and need, the FBO could make a good living by selling the next biggest aircraft.

It was a cradle-to-the-grave concept, and it seemed to work just fine.

The Changing FBO Business Model

However, in the last 30 years, the business of running an FBO has become much more specialized. It has evolved to the point that a full-service FBO is almost nonexistent. We now have businesses that have become SASOs (specialized aviation service organizations) that specialize in primarily fuel, line services and real estate management.

On one hand, I believe this has been a healthy trend for the industry because it allows the owners to specialize in a narrow facet of the FBO business based on their particular talents and knowledge.

On the other hand, this trend has taken the emphasis away from developing a growing pilot population. The growth of aviation is directly tied to maintaining a high interest in training new pilots. The pilot population topped out a number of years ago and has been declining ever since.

We hear all the usual arguments: high cost (by the way, it has always been costly to learn to fly), poor flight instructors, old slow aircraft, etc. AOPA recently completed a study of the student pilot dropout rate, so there will be more talk of that in the near future. That is a subject for another time.

Because many FBOs have chosen not to provide flight school training for whatever reason, an important resource is vanishing in many communities across the nation.

That leaves primarily the specialized schools to fill the void. We have a few national chain flight schools, those schools specializing in instrument training and individual schools that target specific market segments. These segments may include foreign students, those interested in recreational flying, Type A business executives with the means and motivation, and colleges, as well as others.

Pilot Retention

Besides attracting new pilots to enter a flight training program, one of the major problems flight schools have is retaining the interest of the pilots throughout the process. Historically, there is a drop-off after soloing and again after finishing training.

When a new pilot, be it a private pilot, recreational pilot or even those who are starting a piloting career, passes the final flight check, the big challenge for the flight school is to keep this new pilot coming back for more advanced training! This is when the flight school owner, instructors, staff — the whole team — needs to think outside the box and get creative in the area of retention.

In other words, they need a dynamic marketing plan to develop pilot-specific programs to grow the new pilot, keep the interest level up, improve skills and generally have fun. Remember, for the most part, you are competing for discretionary dollars, which can go for flying, boating, golf, sport cars, etc. Here are some ideas for keeping pilots at your flight school:

  • Have pilots join the Wings Program, a pilot proficiency program that can be taken online as well as flying. Sign up at www.FAASafety.gov to create your own account, and educate your flight instructors. See the new Advisory Circular AC 61-91-J.
  • Tail Wheel endorsement: This will make your new pilot a better pilot.
  • Trip to ATC Facilities: Great for IFR and instrument rating trainees.
  • Trip to Altitude Chamber: This is good for all pilots.
  • Flight Reviews: Both VFR and Instrument Proficiently Check. Find the Instrument Proficiency Check (IPC) Guidance publication at  www.FAASafety.gov.
  • Weekend Ground Schools.

What’s most important is how you market these programs. You need to have a customer base from your existing pilots, a database of the existing pilot population from a radius of 200-300 hundred miles, advertising in the local/regional aviation publications, an e-newsletter campaign, social media presence and a sustained community outreach to the interested pilot population. All this should be part of your original business and marketing plan.

So what can Friedrich Nietzsche teach us? For all successful business enterprises, we “must first learn to stand and walk and run and dance” before we can fly. And how do we fly? We develop and use a well-matured business plan, spend some time thinking creatively with the team and remember to add a little fun along the way.

If you’ve had success developing a flight training retention program, I’d like to hear from you. Email me at jenticknap@bellsouth.net.

John Enticknap

John Enticknap 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.

Thursday
Mar172011

Building Long-Term Profitable Customer Relationships, Part 3: Don't Forget the Cheese!

In part one of this three-part series, Are You the Restaurant Owner? we talked about what makes a customer loyal and taking a hands-on approach to customer service. In part two, Do You Feel Lucky? we discussed the perils of lowering the price of fuel to attract new customers.

The following is the third installment:

Part 3: Don't Forget the Cheese!

“Here is a simple but powerful rule, always give people more than what they expect to get.” – Nelson Boswell

In the quest to build long-term profitable customer relationships, we can’t overlook the basic foundation of delivering exceptional customer service. At the end of the day, if you can’t walk up to a customer preparing to depart your FBO with confidence and ask the question, “Would you recommend us?” then please read on.

At Aviation Business Strategies Group (ABSG), we have analyzed various customer service training programs that help teach the basics. Many new customer service employees are not that familiar with general and business aviation and need a good understanding of the FBO business basics as well as the airport environment and flight operations. Mostly, these basic training videos and interactive teaching aids do a very good job of instruction on the mechanics of the job.

However, if your goal is to provide The Ultimate Customer Service Experience, you need to take your customer service training to a whole different level.

The Origin of “Don’t Forget the Cheese!”

While I was working my way through college, one of my jobs was at a restaurant that primarily served hamburgers. We always did a great takeout business, and one day a loyal customer stormed back into the restaurant with his sack of hamburgers in hand.

“I can understand not putting in napkins or forgetting the salt and pepper,” he huffed. “But when I order a cheeseburger, it would be really nice if there was cheese on it.”

Needless to say, we were all embarrassed, and the owner came out and apologized for the oversight and the inconvenience it caused. A few minutes later, the customer left with cheese on his cheeseburgers and a couple of coupons for a return visit.

Later that day, when we had a shift change, the owner pulled everyone together and made his point about carefully checking a customer’s order, especially the takeout orders. Lesson learned, as they say.

Then, as the first shift started to leave, a buddy yelled back to the cook and said: “Hey Charlie, don’t forget the cheese!” That comment kind of lightened up the mood and became our battle cry for the rest of the summer.

This experience stuck with me over the years, and when it came time to develop an advance customer service program for one of our client FBOs, it just seemed natural to brand it: Don’t Forget the Cheese!©.

Key Elements to Great Customer Service Training

There are several necessary elements in developing a good customer service program for your organization. Here are few:

  • Make it memorable. By branding a program with a memorable phrase, it promotes buy-in from the employees.
  • Make it fun. Let’s face it, customer service training can potentially be very boring.You can liven up the atmosphere with a little tongue-in-cheek humor to keep everyone focused and awake.
  • Make it relevant. Include some real-life customer service experiences that happened at your FBO. Use these in role-playing sessions.
  • Use three-dimensional teaching aids. For our Don’t Forget the Cheese! © on-site training, we have fun by introducing a variety of cheeses and of course crackers as well.
  • Make it sustainable. Does your current customer service program have any legs? In other words, are elements built into the program to serve as occasional reminders that make it sustainable over time? After the initial customer service training is complete, most employees operate in the halo effect of something new. However, that halo can fade over time, so make sure you have a vehicle to keep the elements of your program top-of-mind.

The Fundamentals

The use of Cheese in our proprietary customer service training course also serves as key reminders to CSRs, as well as other employees, to practice exceptional customer service. Here are just a few of the fundamentals to great customer service:

  • Smile. Remember to say, “Cheese,” to yourself, as if someone were taking your photo. Even when answering the phone, put on a smile and the customer on the other end will sense they are talking to a happy person.
  • Add a little extra when delivering customer service. Because cheese is often used as a condiment, it represents the added touch, the little extra that puts a smile on the customer’s face and makes them keep coming back.
  • Remember a customer’s name. In the FBO environment, adding cheese can be as simple as remembering a customer’s name. Most people react positively to being called by their name and are impressed when you remember. Are you the restaurant owner?
  • Go the extra mile. Going the extra mile could be something as simple as showing the customer where the pilot lounge is located instead of pointing in the general direction.

For our sustainable part of the Don’t Forget the Cheese! program, we use Cheese Bites© that are little reminders of some of the principles of good customer service. These are sent periodically to employees electronically by e-mail or through the use of social media by the FBO.

If you would like to share a customer service tip, please send them to me, and I’ll publish them in a future blog post. Send them to Ron@thejacksongroup.biz.

©The terms/phrases Don’t Forget the Cheese! and Cheese Bites are proprietary in their intended use and considered intellectual property of Aviation Business Strategies Group.

Ron Jackson

Ron Jackson 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.

Thursday
Mar102011

Optimizing Your FBO, Part 2: Cross-Train and Outsource

In Part 1 of Optimizing Your FBO, we talked about analyzing your business and investing in your front line employees. It just makes good business sense, even in tough economic times, to invest your time and resources in your front line employees because they have the first and the most important contact with your customers.

In this post, Part 2 of Optimizing Your FBO, I want to share additional strategies that will help prepare you to weather any kind of economic environment and increase the efficiency of your operation.

Cross-Train

For most FBOs, employees must learn to multitask — a term that management gurus have coined. It’s really a new term for an old axiom. The best employees, who do the best jobs, can do many different tasks. Gee, what a concept!

For FBOs that are consistently successful, employees do many different job functions that result in a more efficient operation and better employee morale. A happy employee, a happy customer. It can be a very contagious working environment that results in better customer service. Cross-training makes all employees more valuable and better motivated.

Let’s look at some ideas:

  • Why not train your CSRs to meet and greet arriving aircraft? You’re already paying the Workers’ Compensation rate for ramp on the CSRs!
  • How about training your CSRs and building maintenance staff to be wing walkers? Tip: Having two wing walkers, especially in hangar movements, can decrease your incident rate and could help lower your insurance premium, another cost savings.
  • Get your accounting staff outside to learn about fueling and tank farm quality control. They might even learn about fuel quality control and inventory procedures.
  • When was the last time the executive staff worked the ramp or talked to arriving pilots and passengers?
  • Encourage ramp staff and the executive staff to walk the ramp for FOD and look at the FBO facility from the arriving pilot’s point of view.
  • Your A&P mechanics need to meet, greet and be part of the customer’s maintenance project. Once the inspection is completed, the A&P should be part of the discussion with the owner on what is to be fixed; obvious but rarely done.
  • In your flight school, when was that last time your chief instructor called and talked to the students before a check ride? Find out how the student likes flying and the learning experience.

Outsourcing

Many FBOs feel outsourcing is what big companies do, not smaller aviation service companies. The fact is, many services an FBO provides are not necessarily full-time, around-the-clock services. Outsourcing may actually save you money and help keep your front line employees focused on better serving the customer.

For instance, building cleaning, most especially restrooms. This service is not one most employees enjoy, so let’s outsource it. There are many vendors available to do this as well as provide the cleaning solutions, toilet paper, hand towels, etc. Get competitive pricing and monitor closely.

Another area is maintaining indoor plants as well as outdoor landscaping. This is a pain in the neck for most employees, but if you want a first-class FBO facility, you need to pay attention to interior details and keep the grounds well groomed. Get a number of bids, and again, monitor closely.

How about providing some extra services on an on-call basis? No overlapping costs while providing more services and a new stream of income. For instance:

  • Aircraft interior cleaning
  • Aircraft exterior services
  • Quick-turns cleaning
  • Customer car washing and detailing
  • Customer car valet service

In larger cities or communities, there are vendors you can source that specialize in aircraft cleaning and detailing. In smaller communities, you may be able to find a good auto detailer that you can trust and help train to provide on-call services such as aircraft cleaning services, auto valet, customer car washing and detailing services.

What are some other ideas for cross-training and outsourcing? If you have some ideas that have worked at your FBO, please send them to me and I’ll include them in a follow-up blog. My email is jenticknap@bellsouth.net.

John Enticknap

John Enticknap 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.