Many FBOs have gone out of business by lowering their prices during prolonged periods of time. Yes, FBOs need to be price-competitive, but they must maintain healthy margins and find other ways to compete through differentiation.
For most FBOs, employees must learn to multitask. In evaluating FBOs that are consistently successful, we find employees do many different job functions that result in not only a more efficient operation but it actually helps employee morale and adds to the customer service experience. As we like to say, a happy employee, a happy customer.
As FBO operators and managers, one of the most important tasks to keep in mind is maximizing your profit position.
In order to accomplish this, we rely on a standardized fuel pricing method. We think it is fair to say most FBOs use either cost-plus pricing or mark-up pricing. Cost-plus means you want to make a certain “plus” above your cost. For example, your cost today is approximately $2.25 per gallon and you want to make $1.50 per gallon. Therefore, simple math puts the selling price at $3.75 resulting in a profit of 40 percent on sales.
As the price of auto gas falls almost daily, we wonder how the corresponding drop in Jet A fuel might affect the FBO business.
Just four weeks ago, OPEC indicated they would stabilize a barrel of oil at $60. Currently, a barrel of oil is hovering around $54. Comparatively, at the beginning of 2014, index pricing for Jet A was around $3 per gallon. In December we saw roughly $1.60 per gallon resulting in a $1.40 swing.
We would like to welcome B&CA Digest readers to our blog, FBO Connection. Since our first blog post in 2011, the FBO Connection has been a source for discussion, ideas and general conversation on the FBO industry where you’ll find regular contributions from seasoned FBO professionals sprinkled with bits of wisdom and peppered occasionally with some hot topics. We like to call it “Sage Advice for the FBO Community.”
Welcome to our blog series on FBO Best Practices. With each blog post in this series, we’ll discuss “Best Practices” in running an efficient and effective FBO operation.
Best Practice #9: Charge for the free stuff. This is a simple reminder that every customer must contribute to your revenue stream, even the reluctant customer who doesn’t buy fuel.
Welcome to our blog series on FBO Best Practices. With each blog post in this series, we’ll discuss “Best Practices” in running an efficient and effective FBO operation.
Best Practice #8: Planning, budgeting and sales forecasting. It’s not exciting; it’s not fun; but it’s essential to running a successful FBO operation.
Welcome to our blog series on FBO Best Practices. With each blog post in this series, we’ll discuss “Best Practices” in running an efficient and effective FBO operation.
Best Practice #7: Find the free money! From fuel hedging to lowering your credit card interest rates, there’s free money in any FBO operation just waiting to be found.
Welcome to our blog series on FBO Best Practices. With each blog post in this series, we’ll discuss “Best Practices” in running an efficient and effective FBO operation.
Best Practice #6: Make the customer your fan by building a team environment designed to differentiate your service from the competition.
Welcome to our blog series on FBO Best Practices. With each blog post in this series, we’ll discuss “Best Practices” in running an efficient and effective FBO operation.
Best Practice #5: Your lease is your leverage and the cornerstone of your enterprise. Don’t wait until your lease is ready to expire to develop favorable terms.
We’re often asked at our NATA FBO Success Seminars, “When is a good time to negotiate a new lease with the airport?” Having worked with many FBOs in restructuring their leases, we can say unequivocally the answer is simple: anytime.
Welcome to our blog series on FBO Best Practices. With each blog post in this series, we’ll discuss “Best Practices” in running an efficient and effective FBO operation.
Best Practice #4: Empower your employees at the point of transaction in order to diffuse conflict and build long-term profitable customer relationships.
Factoid: Up to 95 percent of dissatisfied customers will return if you handle disputes in a timely and satisfactory manner.
Welcome to our blog series on FBO Best Practices. With each blog post in this series, we’ll discuss “Best Practices” in running an efficient and effective FBO operation.
Best Practice #3: Although discounts off the posted price have become a standard industry practice, FBOs must use a savvy fuel pricing strategy and think win-win.
Welcome to our blog series on FBO Best Practices. With each blog post in this series, we’ll discuss “Best Practices” in running an efficient and effective FBO operation.
Best Practice #2: You have but one opportunity to make a good first impression. Operate your FBO from a customer’s perspective.
Let’s face it. Customers choose FBOs that project a positive image and a feeling of trust, two very important elements in delivering a great customer service experience.
Welcome to our new blog series on FBO Best Practices. With each blog post in this series, we’ll discuss “Best Practices” in running an efficient and effective FBO operation. Also, please join John and Ron for the next NATA FBO Success Seminar, March 24-25, 2014, in Las Vegas.
Best Practice #1:
Recently we conducted our 2014 Annual FBO Industry Survey and the overall results indicate a mixed market that has yet to catch real traction.
We surveyed more than 500 FBOs and asked for responses to these statements:
Welcome to the next installment of our continuing AC-U-KWIK FBO Connection Series: FBO Survival. This series focuses on the various strategies and tactics needed to survive the daily rigors of running a successful FBO operation.
"My father said, ‘You must never try to make all the money that's in a deal. Let the other fellow make some money too, because if you have a reputation for always making all the money, you won't have many deals.'"
- J. Paul Getty
By John L. Enticknap and Ron R. Jackson, Aviation Business Strategies Group
Welcome to the next installment of our continuing AC-U-KWIK FBO Connection Series: FBO Survival. This series focuses on the various strategies and tactics needed to survive the daily rigors of running a successful FBO operation.
"Status Quo, you know, is Latin for ‘the mess we’re in.'"
- Ronald Reagan
About the time you think you’ve got your FBO running smoothly, that’s the time you need to step back, reevaluate, get back out on the floor and see what’s going on. If you are willing to accept the status quo, chances are you’re becoming a little too complacent and that can spell disaster in any business.
By John L. Enticknap and Ron R. Jackson, Aviation Business Strategies Group
Welcome to the next installment of our continuing AC-U-KWIK FBO Connection Series: FBO Survival. This series focuses on the various strategies and tactics needed to survive the daily rigors of running a successful FBO operation.
In the business world, everyone is paid in two coins: cash and experience.
Take the experience first, the cash will come later.
- Harold S. Greneen
In our continuing series, we are seeking to help you run your FBO more efficiently by urging you to compete while helping you understand what drives your business.
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