FBOs Should Avoid the Fuel Price War Trap!

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FBOs that compete on fuel pricing are setting themselves up for failure. We've seen it time and time again. For this blog post, we’ll examine a case study scenario that is derived from our experience in operating FBOs, as well as feedback from FBO operators who have attended our FBO Success Seminar.

Case Study Scenario

A new FBO comes onto the field and immediately lowers their fuel price, thinking they can gain market share and take business away from their competition. When this happens, the incumbent FBO on the field may feel a little intimidated and adjusts their fuel price downward in order to compete. A natural reaction but not a sound business strategy.

Instead, the incumbent FBO should look at the profile of any customers they may have lost due to the initial fuel price discount the new FBO is offering. When they do, they will usually find that the ones that have defected to the new FBO for the lower price are actually what we call “bottom feeders” or marginal customers. They will flit from one FBO to another, based only on the price of fuel. They often ignore any sense of loyalty and don't care about quality of service.

Over the years that we facilitated the FBO Success Seminar, we were engaged by attendees regarding this scenario more than any other issue brought up for discussion. Our recommendation is to not go down this rabbit hole. It can become a dark pit that’s hard to climb out of.

Instead. stay the course, leave your price unchecked. And if an FBO truly believes in the value their brand, raise the price of fuel a few cents. This can help balance the loss of a few marginal customers.

At first blush, this strategy may sound incongruous, however our experience is that it works and the feedback we received from several seminar attendees supports this approach.

The FBOs that held or increased their price had better margins over the long term, and thus better profitability. Yes, they may have lost a few lower-tier/marginal customers, but they retained their main core of loyal customers that aren’t as price sensitive. These owners/pilots put a premium on value received in terms of quality of service, customer experience and care for their aircraft.   

In fact, many FBOs that adopted this tactic were able to invest more into the customer experience and their main customer base reacted positively.

In building a strong FBO band, selling low-cost fuel does not play into the equation. The North American FBO Business Model only works if the FBO adds a fair and equitable margin to the wholesale cost of fuel and remains true to retaining this margin. Afterall, this margin must pay for everything including employee salaries and benefits, facility upkeep, ground service equipment maintenance, consumables, leasehold expenses, and the really big one, insurance.

Therefore, calculate the true cost of doing business and price your fuel accordingly.

An exercise we recommend for all FBO operators is to keep track of fuel sales by customer name. Many will find that the 80/20 rule holds true where the top 20% of customers represents 80% of the business. With this in mind, an FBO should concentrate on this part of their business. We have found that the truly marginal customers are most likely to complain the most, cause a distraction, and disrupt valuable customer service resources.

Therefore, when you lose a marginal customer to a competitor based on fuel price, this will leave you more time and resources to concentrate on your real core customers.

© 2025 ABSG/TJG

Please leave any comments you have about this blog post below. If you have any questions, please send us an email: John Enticknap, jenticknap@bellsouth.net; Ron Jackson, ronjacksongroup@gmail.com.

ABOUT THE BLOGGERS: John Enticknap is the founder of Aviation Business Strategies Group (ABSG). He has more than 35 years of aviation fueling and FBO services industry experience and is an IS-BAH Accredited auditor. Ron Jackson is co-founder of ABSG and president of The Jackson Group (TJG), a PR agency specializing in FBO marketing and customer service training. Visit the biography page or absggroup.com for more background.