Your Airport Lease: The Lifeblood of Your FBO

by John L. Enticknap

If you build that foundation… the business foundation, and the experience foundation, then the building won't crumble.—Henry Kravis

Like most FBO owners and operators, you probably wonder what your FBO is worth. To answer this question, you should start by asking another important question: What is my lease worth? That’s because they are inherently linked. 

If you are thinking about capitalizing your investment or looking to sell your business, the first thing a banker or a buyer will assess is the value of your lease, especially the length and terms. 

That’s why it’s such a critical component when figuring the intrinsic value of your FBO. You may have just put millions of dollars in building a fantastic infrastructure, but unless you have negotiated a long enough lease to amortize your investment, it’s easy to get upside down with little or no wiggle room. 

With a long-term lease of at least 20 or more years, you have great value. However, if you have less than five years you have little or no value. 

(Side Note: One of our most popular courses we conduct at the NATA FBO Success Seminar is “Developing a Favorable Airport Lease”. During this session we discuss many of the important elements of an FBO airport lease agreement. If you’re interested, the next one is in Atlanta November 8, 9 and 10. Contact NATA at www.nata.aero and look under Events, or call 800-808-6282) 

For the purpose of this blog, let’s hit a few of the highlights we discuss in our seminar.  

Length of Lease

First and foremost, the longer term you can negotiate the better. Let’s say you have negotiated a 20 or 25 year lease. You should also negotiate at least one additional option period of five years; two option periods would be even better. The goal should be to have at least 30 years on your lease including the option periods.  

It is not unusual to get longer terms at some airports for large investments in facilities. I’ve seen leases of 40 and even 50 years. ‘The Longer the Better’ should be your mantra. When you are negotiating lease extensions, try to get at least back to this sort of term. You’ll need it to finance capitol projects and have a reasonable depreciation term.  

However, in order to get this type of long-term lease, be prepared to invest in facilities and/or upgrades. Traditionally, the length of term is commensurate with a larger capital investment. 

Big/Commercial Airport Lease Terms 

So why are the big airports giving only five year leases and reliever and general aviation (GA) airports giving longer term leases?  

During the recently held Airports Council International (ACI)–North America meeting in San Diego, there was a session titled “Fixed Base Operators and Airports—Strategies for a More Successful Partnership”. A detailed discussion was conducted concerning lease term length. It seems there have been some divergent opinions between some airports and FBO’s concerning lease terms.  

At a few large airports, five year leases are all that have been granted. Some of the new FBO leases, included existing facilities, have high rental rates and gross revenue fees being paid to the airport authorities. In many of these cases, renovation of existing facilities was all the capital investment required by the FBO. Not surprisingly, General Aviation activity at these selected airports was not the priority for the airport authority. That’s because commercial airline operations took precedent at the vast majority of the operations. 

In all appearances, both the FBO community and the airport community had a very open and fruitful discussion at the ACI conference. The results being that both parties appear to understand the lease term issues from each other’s perspective.  

For the predominantly General Aviation airport sponsors, both parties understand that to get infrastructure built, a long-term lease is required. Fortunately, this was not difficult to appreciate. 

During a recent meeting I had with one Airport Director, he fully understood the issues for the FBO. He realizes that for the FBO to be successful--to provide the high quality services that the airport and customers desire and make a reasonable profit--the FBO must have a good lease with a good term.  

This practice will attract superior FBO operators who can make capital investments in hangars, new business operations and employees.  

The All-important Minimum Standards Clause 

This same airport director also mentioned that one of his first priorities, before commencing lease negotiations with an FBO, was the development of new up-to-date Minimum Standards provision to be inserted into the new lease. 

I’m sure that many (most) FBO operators have Minimum Standards written into their lease—at least we hope you do. Minimum Standards are your basic protection for your business. In addition to your lease, they allow your FBO to operate within defined parameters.  

Minimum Standards allow you to know

• What services you must provide 
• What services you may provide
• What defines a full service FBO  
• What your investment and facilities requirements must be  

More than what defines your business, Minimum Standards protects your business from inequitable competition. If another FBO wants to operate at your airport, they must provide the same services, the same investment and the same facilities.  

Since 1938, Congress has passed laws to improve safety and efficiency at Airports by, among other things, promoting competition among aeronautical users. This includes FBOs.  

In order to promote competition, the Sponsor Assurances lease provision prohibits any party from obtaining or maintaining an exclusive right to perform services at an airport, and requires Airport Authorities (also called Sponsors) to not unjustly discriminate against aeronautical users of the airport. Minimum Standards, therefore, are your safeguard. It allows for fair competition and makes sure that your FBO will continue to be successful. 

Other Lease Issues 

These two issues are just examples of important items an FBO lease covers. Here is a list of other issues we cover at our FBO Success Seminar regarding leases:  

• Term and option years
• Operating rights
• Payments: rental, gross revenue and out years to include escalators
• Building/ramp maintenance responsibilities
• Assignment-sale clause
• Termination-from FBO and Lessor
• Non-discrimination clauses
• Improvements, new buildings, renovations
• Insurance, Indemnity, Hold Harmless
• War & National Emergency
• Right of  Entry
• Environmental Liability 

The airport management and the FBO owners make success together for their mutual benefit. As we mentioned in our premise, the lease is your foundation, your value in the business and ultimately your protection. 

If you have a particular question or would like to discuss a lease issue, please let me know. We would like to hear from you. Contact 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.

FBO Marketing, Part 2: Affordable Promotions

As any FBO owner or operator knows, attracting new customers and keeping current customers is the lifeblood of your business.

In previous blog posts, we have discussed the aspects of keeping current customers by providing an exceptional customer service experience: Be the restaurant owner, and don’t forget the cheese!

In this multipart series, we talk about attracting new customers with little or no cost. In Part 1, Low- or No-Cost Promotions, we discussed the basics of promoting your FBO on a limited budget. In this post, we’ll talk about public and media relations as an affordable promotion that will help extend your brand reach even further.

Public and Media Relations

Writing and distributing a news release is a cost-effective communications tool. However, there are some basic guidelines that FBOs need to follow in order to ensure their announcements make their way to the selected media.

1. Ask yourself if the news is newsworthy.

Many companies, including FBOs, will send a news release out on everything that happens at their place of business. Trouble is, most of it is not newsworthy and, therefore, gets ignored. If you do too many of these, there is a chance that when you have something that is truly newsworthy, it may get passed over because of your past history. 

Editors and writers keep very busy, so only offer announcements that are at least potentially newsworthy. Here are a few ideas that most editors find of interest:

• New facilities or expansion of current facilities
• Any significant renovations
• Acquisitions of other facilities on your airport or other FBOs
• Key personnel changes to your organizations

Here are some things editors would rather not see:

• Announcements about a new web site
• Releases that are not timely or current
• News that is completely off target and irrelevant to the industry

2. Be clear and concise.

In journalism school, you learn to write in an "inverted pyramid" style. In other words, say what is most important in the first sentence or paragraph.

• Then support the main information with other facts and figures. Think of the five “Ws”: Who, what, where, when and why?
• Include a relevant quote by a key manager or employee
• Follow up with what we call a “boilerplate” that is a concise overview of your company information, the services you provide and your contact information.
• Keep the information as short as possible, and don’t use flowery language.

3. Include a photo if possible.

• Use a fairly good camera. Make sure the photos are in focus and of high resolution. Most publications request a resolution of 300 dpi.
• Frame your photo so you are not too far from your subject.
• Watch out for background clutter. This is particularly important when you shoot a photo of an employee for what we call a ‘head shot’. I’ve seen photos taken against a wall with a clock in the background, pictures, bright colored paintings and even model aircraft that look like the airplane is flying right out of the person’s head.

4. Timely and relevant: Think outside the box!

Earlier, we talked about being timely and relevant with your information. A couple of years ago, I worked with one of my clients on a short news release relating to the popular green movement. They had just replaced all their gas powered ramp courtesy carts/golf carts with state-of-the art electric carts. They also invested in a new ramp sweeper to pick up FOD.

For this announcement, I took a photo of their new cars along with the ramp sweeper, and framed it with an aircraft in the background to add relevance to the aviation market. I also used their distinctive terminal building with company logo as a backdrop. As they say, a photo is worth a thousand words.

Then I issued the photo with a photo caption only, not as a long news release. Of course I included details about “going green” on the ramp. This announcement was picked up by many on the media database.

Media Database

Now that you’ve crafted your new release, it’s time to send it out to a qualified database. First of all, you should always send it out to your local media, including newspapers and business journals. Also include local TV and radio if possible. You never know when someone needs a story like the one you send in or maybe just a filler story.

Also, you should build a list of aviation writers and editors. You can find these contacts in the front part of magazines and newspapers in what they call the masthead. Also, for most media, you can go to their web sites and get either specific email addresses or a generic one that goes to their news department. 

And don’t forget the electronic newsletters, like acukwikalert.com. They’ll be happy to review your release for posting.

In addition, you should give a courtesy call to a few of the selected media to make sure they received the information.

Electronic and Social Media

All news releases should be published on your Web site as well. Services like Google send out crawlers that search for keywords that help push your news item to the top of a search. Speaking of keywords, your release should use key industry words and phrases in both headlines and the body of your copy.

Also, post a link on your company’s Facebook page to your news release on your Web site, and issue a tweet to your followers.

If you have any questions regarding writing or issuing a news release, please contact me at Ron@thejacksongroup.biz.

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.

The Value of a Business Plan in Managing Your FBO

“A business plan is primarily an organizing tool used to simplify and clarify business goals and strategies, which might otherwise appear complex and intimidating. However, a business plan is also a sales tool. … Having no plan is like sailing the seven seas without a compass, digging a ditch without a shovel, or hunting for pirate's treasure without an 'x' marks the spot. Without one, you're better off heading down to the horse races and betting on the 'Win Three.' A plan helps keep you on schedule, makes it easier to recognize success and failure, helps pump you up when things aren't going so well, and most importantly, provides an essential focus.” – Peter J. Patsula, The Entrepreneur's Guidebook #9, "Supercharging Promising Projects with a Plan of Action.”

In some of our previous blog posts, we have mentioned the need to develop a strategic business plan, not only as a way to define business goals, but also to help formulate your personal goals, such as detailing an exit plan from your FBO business.

As most of you know, if you want to borrow money from a bank, the SBA or other sources, one of the first things they will ask you for is a business plan. This alone is a good reason to develop one. However, beyond this basic need, a business plan can be much more and serve your business in many different ways.

The quote above illustrates the many benefits in developing a business plan. As any pilot knows, without a proper flight plan, you will never get to your destination efficiently.

Developing a plan can be intimidating, but it’s not too bad when you keep it simple. Do some organized research on your business; ask some fundamental questions; do a SWOT (strengths, weaknesses, opportunities and threats) analysis; conduct a market and pricing analysis; then lay out your plan in an organized manner.

Plan Basics

Let’s look at some basics involved in developing a plan:

Company Description: First, we need to establish the baseline information for your firm, including the type of business you run, the management and employee structure and a statement to define the mission of your company as well as a sense of your vision and direction for the growth of the company.

Industry Analysis and Trends: Define the marketplace you operate in now and the near future; this includes seasonal factors, maturity of the industry, etc.

Target Market and Audience: Define what markets you serve and detail any new business areas in which you wish to operate. Also define your target audience or audiences (customer groups) you would like to attract to your business.

The Competition: Define and isolate your competition by looking in detail at not only your competitors on your airport but also within a 50- to 100-mile radius.

Strategic Position and Risk Analysis: Consider doing a SWOT analysis to evaluate your company’s strengths, weaknesses, opportunities and threats. Included should be an internal survey of all your employees to gain their input as well as vendors and suppliers who know your industry and perhaps sell to your competitors. Find out what may differentiate the way you do business from your competitors and use this to position your brand in the marketplace.

Marketing Plan and Sales Strategy: Analyze what you are doing to promote your business now, and develop new ways you can penetrate existing markets and branch out into others. Also, define your sales goals and objectives in terms other than the amount of money you want to make. Rather, state in terms of actionable items that can be obtained and measured in terms of results.

Operations: Review your existing business and how it operates — labor, equipment, technology, customer service and management information systems.

Community Involvement: We all know this is a relationship business, so include in your plan what you are doing, or willing to do, within your own general and business community. If you’re already involved, think what you would like to do better.

Development, Milestones & Exit Plan: Detail your long-term goals, growth strategy and exit plan including a timeframe to complete.

Financial Plan: This is the bottom line. Determine what the business is doing from a profit-and-loss point of view, and define the short-term and long-term capital needs to get where you want to go.

Guide Points

To sum up the critical path in starting, developing and finishing a plan, think of these three simple guide points:

• Develop a fundamental understanding of where you are today.
• Take a realistic view of your options moving forward.
• Think of your plan as a roadmap to success, a guide you refer to along the way to keep you on course.

The whole point of a business plan is to have firm ideas of where you are and where you want to go while realizing there are some hard choices to be made along the way. In the end, keeping focus is the key ingredient to success, and a plan will help you keep that focus.

Have any additional thoughts? 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.

FBO Marketing, Part 1: Low- and No-Cost Promotion

Did you know there are ways you can market your FBO with little or no out-of-pocket expense?

At our NATA FBO Success Seminars, we examine various aspects of marketing for an FBO. One of the most popular sessions is Marketing and Communications for Any Size FBO.

Many FBOs that attend our seminars believe they can’t compete with the big FBO chains because they don’t have the money and resources. To that, I kindly say, “Bunk”. There are plenty of ways you can “shake hands” with your customers or potential customers without breaking your budget or robbing your kids’ piggy bank.

Getting Down to Basics

In the business of running an FBO, there are basically two ways to increase your business and, thus, the amount of fuel you sell.

1. Increase the number of base customers you service.
2. Increase the number of transient customers you service.

For the purpose of this blog post, we will concentrate on the second item of reaching out to the transient customer. However, if you are having trouble filling your hangars and think you can do a better job of increasing your base customer population, read on. There are tips for you as well.

Here is what I call the Level One, or Basic Communications, Checklist. You might be already doing these, but they are worth the review. These are not all free, but we’ll get to those shortly:

• A listing in a major FBO directory and Web site, such as AC-U-KWIK and acukwik.com. There are various listings and offerings to choose — some at little or no cost. You need to create some kind of awareness at the most basic level.
• Fuel supplier listing. Most FBOs have a relationship with a major fuel supplier. Make sure you are listed accurately in everything they produce, including their Web site and other promotions.
• Basic Web site. By now, most FBOs have built at least a basic Web site. Believe it or not, though, some companies forget to put their phone numbers up front to make it easy for the customer to make contact. Instead they bury it on an obscure page.

You must remember the most basic reason for a Web site is to provide information quickly. Therefore, you don’t need a lot moving pieces, fancy graphics, etc. Also, you should test the viability of your Web site in terms of search engine optimization (SEO) by doing a Google search of keywords for your area and business segment. Keep in mind keywords a customer would use to do a Web search. Some keywords for the fueling side of the business are obvious:

• FBO Dallas, TX (Your City and State) and FBO DAL (Your airport identifier)
• FBO Dallas Fort Worth (or) FBO North Texas
• Aviation Fuel Dallas, TX (or) Jet A Dallas, TX (or) Avfuel/Jet A DAL

Note: If your facility does not appear at or near the top after keyword searches, you need to look into rewriting the copy for your Web site to include keywords and phrases for your business segment and geographic locations. There are numerous free articles on the internet that can help you.

Web Site Tip: Refresh your copy on a regular basis. Keep keywords and phrases intact, but create something new that will be of interest. And don’t forget to post any press releases or news articles that may have been published. Look for ways to post your press releases to the free aviation sites, such as acukwik.com. Do some research, and create a PR database to which you may send your news.

• Get Social! Create a business Facebook page, list with LinkedIn, and investigate Twitter but only if you are serious about keeping social networks active and up to date with frequent posts.
• Giveaways. Don’t be afraid to put out a bunch of low-cost pens or other freebies at the customer service desk or in the pilots’ lounge. What’s the worst thing that could happen? So what if they disappear? That’s a good thing. They just might get back to the customer’s home base where a dispatcher gets a hold of one and, presto, your brand is right there, top of mind!

The Really Free Stuff

As mentioned, there are a number of things you can do that really don’t cost anything except some time and effort.

• I Spy Program. One of the techniques we teach at the FBO Success Seminars is creating your own I Spy Program. This is simply building a database of potential customers by tracking the transient customers who use your airport, or surrounding airports, but don’t come to your facility.

In the old days, you would simply use a pair of binoculars and scope out your competitor’s ramp and record the aircraft registration numbers. Now there are a number of electronic programs you can access that track flights into and out of your area. Usually a registration number is associated with the flight, and you can then cross-reference this registration number with a database of aircraft owners and operators. Some of these databases do cost money, but most that use these services do find them to be worthwhile.

Once you’ve started to build your database, send out a postcard to the potential customer offering an incentive to come to your facility on the next occasion. Incentives can be a one-time fuel discount, lav cleaning, interior cleaning, a fruit tray, etc. Note: Most of the time, one contact will not do the job. You need to be consistent and aggressive in making frequent contacts.

• Pick up the phone. Sounds simple, but if you can track a potential customer with an address, you should be able to get a phone number. Don’t be afraid to ask for their business.
• Be aware of customers who haven’t been back in a while. Getting customers to come back is like finding new customers. Again, pick up the phone, and find out why they haven’t been back. Ask them if you did something wrong, and offer an incentive to get them back in the fold.
• Be aware when a new customer does come in. Have your line service personnel and CSRs become aware when you do attract a new customer. Then be the restaurant owner. Meet, greet, thank him or her for the business, etc. And don’t forget the cheese!
• Write hand-written notes. It doesn’t cost anything to write a note thanking customers for their business. Anytime you can keep a customer coming back time and time again is one fewer customer you have to replace.
• Network, and be a part of the community. FBO owners, operators and general managers should use opportunities for community involvement, which will strengthen local aircraft owners and operators’ and their flight department staff’s awareness of your business. There are usually high-profile clubs, fellowships and nonprofit organizations that rely on volunteers that include high net worth individuals. Moving in the right circles can strengthen these relationships and help provide referrals. This is a great way to increase your base customer prospect list.

And because business aviation is such a small niche market, you never know who a pilot for a new base customer knows. Chances are they know more pilots at other companies who just might give you a try.

These are just a few strategies and tactics we teach at our FBO Success Seminars. If you have something that works for your FBO, please let me know by emailing me at Ron@thejacksongroup.biz.

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.