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Read More10 Essential Elements of a Favorable Fuel Supplier Agreement
/By John L. Enticknap and Ron R. Jackson, Principals, Aviation Business Strategies Group
In our last blog post, we concluded our series on the 10 critical elements of an FBO airport lease that was first on our list outlining the six intangibles that can build equity in your FBO.
Next up is a discussion about another intangible that will help build equity in your FBO enterprise: A favorable fuel supplier agreement.
One of the most important agreements you can have with any vendor in the FBO business is the one you establish with your fuel supplier. When done properly, it can add real intrinsic value to your business and, quite frankly, make or break your bottom line.
Over the years, we've reviewed and helped write many fuel agreements and have coached FBOs on the intricacies of arriving at a favorable agreement.
As we teach in our NATA FBO Success Seminars, your initial approach and mindset to developing a favorable fuel supplier agreement is one of partnership. Working as partners with your fuel supplier will provide a win/win agreement where both parties want the other to succeed and are willing to work in concert to that important end.
With this in mind, here are the ten essential elements of a favorable fuel supplier agreement:
1. Term of Agreement.
2. Pricing Methodology.
3. Transportation & Delivery.
4. Terminal Locations.
5. Credit Terms.
6. Taxes: Federal, State, Local & Flowage Fees.
7. Quality Control & Training.
8. Marketing Support.
9. Credit Card Processing.
10. Contract Fuel Programs.
In coming blogs, we’ll discuss each of these and make recommendations on how to improve the equity in your FBO.
About the bloggers:
John Enticknap has more than 35 years of aviation fueling and FBO services industry experience. Ron Jackson is co-founder of Aviation Business Strategies Group and president of The Jackson Group, a PR agency specializing in FBO marketing and customer service training. Visit the biography page or absggroup.com for more background.
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Four Tips to Retain Good FBO Employees
/Employee recognition and retention: What gets rewarded gets repeated
By John L. Enticknap and Ron R. Jackson, Principals, Aviation Business Strategies Group
In our last blog, we mentioned that one of the top concerns for FBOs in our Mid-Year Fuel Sales Survey was finding and keeping qualified employees. Needless to say, it's a lot easier to retain a good employee than to go out and find a replacement.
Keeping your valued employees means you have less churn and provides the ability to deliver a more consistent customer service experience.
Retention of good, qualified employees should rank as a top goal for FBO managers and supervisors along with retention of customers. You should work just as hard to accomplish both.
Here are four tips on retaining good employees:
1. Develop a good internal culture. Make your FBO a rewarding and fun place to work. Internal culture starts at the top. Lead by example.
2. Listen to your employees. Make sure your employees have a voice in your organization. Be appreciative of their input. Invite them to help create your mission, vision and customer promise statements. Employees who feel their voice is being heard will “buy into” the process and help create and maintain a healthy company culture.
3. Treat your employees as stakeholders. A stakeholder is anyone who has a stake in the company in terms of determining success or failure. Besides employees, other stakeholders include customers, vendors and suppliers.
4. Reward the routine. Let’s face it. Many of the tasks performed by FBO employees are repeated numerous times day in and day out. That’s why it is important to let employees know they are doing a good job, even for the most mundane routine task.
On this last point, we’d like to expound a little. By reward we are not talking about money. Research indicates that what most employees seek is being appreciated for a job well done. So let them know. Pat them on the back. Shake their hand. Let them know you appreciate their contribution as a true stakeholder. For example:
”That’s a great job of cleaning the lavatory. Way to go.”
”Super job of marshalling that aircraft. You used crisp and precise hand gestures. Keep it up.”
”You handled that last customer complaint beautifully by taking ownership of that oversight and making it right. Nice job.”
In their book Managing Knock Your Socks Off Service, Chip R. Bell and Ron Zemke state that what gets rewarded gets repeated. If you want your employees to grow with you, yes, they need to be compensated fairly. But what’s more powerful is your recognition, not just for their time on the job, but for their accomplishments as well.
How true. Showing employees you appreciate their contribution completes the retention cycle and helps cement a more permanent stakeholder relationship with the FBO.
What do you do to retain employees? Let us hear from you by making a comment below.
About the bloggers:
John Enticknap has more than 35 years of aviation fueling and FBO services industry experience. Ron Jackson is co-founder of Aviation Business Strategies Group and president of The Jackson Group, a PR agency specializing in FBO marketing and customer service training. Visit the biography page or absggroup.com for more background.
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The Top 10 FBO Challenges for 2015
/By John L. Enticknap and Ron R. Jackson, Principals, Aviation Business Strategies Group
In our last two blog posts, we reported the results and findings from our Mid-Year FBO Fuel Sales Survey. For this blog post, we look at the answers from a write-in question we asked in our survey:
What has been your biggest challenge so far in 2015?
With a nod to David Letterman’s Late Night Show Top 10 List, we’ve compiled our own list based on our survey results and named it the Top 10 Challenges FBOs are Facing in 2015, and offer a little sage advice.
No. 10: Contract Fueling. Not surprisingly, this topic made the top ten list. This subject has been discussed and debated many times in various forums including the NATA FBO Success Seminar. Our tip to FBOs struggling with this topic is to stay in your comfort zone with your margins, establish your own FBO contract sales price and offer this to your contract customers. Do your homework and track your contract sales. Did you sell more with a great discount?
No. 9: Managing your fuel inventory. Don’t get caught short. Develop daily dashboard reports to keep track of what’s in your tank. Check fuel prices on Thursdays to spot trends and to order fuel for Monday delivery if the prices are going up on Tuesday.
No. 8: Filling empty hangars. This is a constant challenge for many FBOs. Be proactive in identifying potential hangar prospects within a 50-mile radius. Use your flight tracking program to attain aircraft registration info. Put an attractive incentive package together, pick up the phone and call for an appointment. Also, visit neighboring airports and make cold calls. Know the costs of your hangar facilities.
No. 7: Fluctuating Fuel Prices. Welcome to the new normal. Our advice is make sure you keep track of the various price of loads that are in your tank. Be consistent with the margin you want to achieve relative to selling off your old inventory and adding new. Platts-based fuel pricing data changes on Tuesdays for most FBO fuel contracts.
No. 6: Runway closures. This is obviously a problem that’s out of your control. Use down time to maintain ground equipment, train staff and freshen up the lounge area.
No. 5: Weather. This is another problem that’s out of our control. However, interestingly, it’s the number five concern among those surveyed.
No. 4: High AvGas Pricing & Availability. We saw this comment many times, especially among smaller FBO operations in the Central time zone. Here is an anonymous comment submitted in the survey that sums up the situation:
“Uncertain supply issues that continue to plague delivery and pricing of AvGas. Rising prices which are counter to the price of oil and gasoline price at the pump are trends that are harming the industry as a whole, making it difficult, if not impossible to forecast sales and the future of the industry.”
No. 3: Growth and attracting more business to the airport. Although our survey showed very positive signs of growth among FBOs in larger markets, smaller FBOs pumping under 40,000 gallons of Jet A per month are mostly reporting no growth. Historically, the larger markets improve first, followed by the secondary markets. As reported in our most recent blog post, there are positive industry recovery signs in both flight hours being flown and in the United States manufacturing sectors.
No. 2: Finding and keeping qualified employees. This problem is not unique to the FBO industry. Working hand-in-hand with the local Chambers of Commerce and grass roots efforts at job fairs are critical. But perhaps more importantly is giving a potential employee a realistic look at the offered job. This may include on-the-job demonstrations, before hiring, from seasoned employees of the actual job being offered. While determining aptitude is important, assessing attitude is essential. Therefore, involve your team in the process.
No. 1: Marketing and inconsistent/low traffic counts. Attracting and waiting for new transient customers is one thing. Keeping the business you have is another. Make sure you are doing everything you can to keep your current customers. That’s worth more than spending marketing dollars to replace a disgruntled customer. It starts with a consistent customer service experience. Invest wisely by making sure your employees have good customer service skills and then lead them by example. Always ask your current customers if they would recommend you. If they hesitate, then fix the internal problem first.
What is the biggest challenge you face in the FBO business? We’d like to hear from you. Please write your comment below.
About the bloggers:
John Enticknap has more than 35 years of aviation fueling and FBO services industry experience. Ron Jackson is co-founder of Aviation Business Strategies Group and president of The Jackson Group, a PR agency specializing in FBO marketing and customer service training. Visit the biography page or absggroup.com for more background.
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Mid-Year FBO Fuel Sales Survey: 71 Percent of Respondents Report Increased or Flat Fuel Sales
/By John L. Enticknap and Ron R. Jackson, Principals, Aviation Business Strategies Group
Following our Annual FBO Fuel Sales Survey, we initiated our first Mid-Year Fuel Sales Survey. Please note this is a top-line survey designed only to gauge trends. The survey database was provided by AC-U-KWIK.
As a quick review, the annual survey results we released in January indicated that 49 percent of FBOs surveyed reported an increase in Jet A fuel sales in 2014 compared to the results of 2013 while 18 percent reported fuel sales to be about the same. This gives a total of 67 percent reporting having at least the same fuel sales or improved fuel sales over 2013. (For complete results of our annual survey, please click here.)
As part of this mid-year survey, we asked:
For the first six months of 2015, compared to the same period in 2014, are your Jet A fuel sales:
- Up from a year ago?
- Down from a year ago?
- About the same?
A total of 45 percent of the FBOs responding to the survey reported sales were up from a year ago with 26 percent indicating sales were about the same. That’s a total of 71 percent reporting having at least the same fuel sales or improved fuel sales from a year ago.
Conversely, 29 percent indicated Jet A fuel sales were down in 2015 compared to the same first six months of 2014.
For this mid-year survey, we also wanted to get a feel for the average posted Jet A retail price so we asked:
What has been your average posted retail price per gallon of Jet A over the past six months? Respondents were given a choice of price ranges with the following responses:
- 2 percent reported their posted Jet A price was under $3.00 per gallon.
- 28 percent between $3.00 and $4.00 per gallon.
- 52 percent between $4.00 and $5.00 per gallon.
- 12 percent between $5.00 and $6.00 per gallon.
- 6 percent indicated more than $6.00 per gallon.
As we all know, because of various industry discount programs, the majority of FBOs do not sell Jet A fuel at the posted retail price. However, the results of this survey question can provide insight into what FBOs are posting on average.
Further, it has been our experience in consulting with many FBOs as well as conducting the NATA FBO Success Seminar, that the average margin on Jet A fuel sales runs between $1.30 and $1.60 per gallon. FBOs that are consistently selling Jet A Fuel below a margin $1.10 are having a hard time of making ends meet.
For our next blog post, we’ll draw some conclusions and take a look at the responses we received from our write-in question:
What has been your biggest challenge so far in 2015? Some of the answers may surprise you.
About the bloggers:
John Enticknap has more than 35 years of aviation fueling and FBO services industry experience. Ron Jackson is co-founder of Aviation Business Strategies Group and president of The Jackson Group, a PR agency specializing in FBO marketing and customer service training. Visit the biography page or absggroup.com for more background.
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FBO Tip of the Week: Four Steps to Discover Your FBO’s Natural Rhythm!
/By John L. Enticknap and Ron R. Jackson, Principals, Aviation Business Strategies Group
In our previous blog we discussed how every employee and department in an FBO needs to pull together like sections of a well-tuned orchestra in order to create a harmonious customer service environment.
Because every department touches a customer in some way, customers can sense when there is discord. Instead of one sound coming from one orchestra, they begin to hear many drums and many instruments playing haphazardly.
So how can FBOs pull the orchestra together, make many departments and teams move and sound as one and create an operating environment for delivering the ultimate customer service experience?
Here are four steps to creating departmental team harmony and discovering your own FBO’s natural rhythm.
- Step 1: Develop and share the big picture. All employees should know the heritage of the company, where it is headed and the defining role they play.
- Step 2: Lead by example, and empower management and supervisors to lead with enthusiasm, exhibiting encouraging behavior for employees to follow and do the jobs they've been hired to do with professionalism.
- Step 3: Encourage and permit employees at all levels to have a voice in the process and be an instrument in the orchestra. Recongnize everyone contributes to the success of the FBO and is a valued stakeholder in the company.
- Step 4: Follow through, and act with integrity. Everyone is watching, including the customers. Employee's actions reflect the company culture. Share company values, and include them in the performance reviews.
By preparing to meet the requirements of each of these steps, the FBO owner, operator or manager can create an operating environment for the team that is fun to work in and becomes a comfortable space for the customer.
About the bloggers:
John Enticknap has more than 35 years of aviation fueling and FBO services industry experience. Ron Jackson is co-founder of Aviation Business Strategies Group and president of The Jackson Group, a PR agency specializing in FBO marketing and customer service training. Visit the biography page or absggroup.com for more background.
FBO Tip of the Week: Discover Your FBO’s Natural Rhythm!
/By John L. Enticknap and Ron R. Jackson, Principals, Aviation Business Strategies Group
Listen to the rhythm of your FBO. How does it sound? Do you hear many instruments playing in harmony? Or rather a rag-tag hodgepodge of many different departments, working independently and making an awful racket?
From line service and customer service to accounting and maintenance, every department and every employee touches a customer in some way. One bad towing job, one dirty restroom, one inaccurate invoice or one late maintenance delivery can move customers out of their comfort zone and motivate them to take their business, and their multi-million dollar aircraft, to a competitor.
For the premise of this blog, let's think of and visualize each department as a section of a well-tuned orchestra.
In the typical FBO organization, we have several departments or musical sections that make up the orchestra. They include fueling/line service, customer service, maintenance, avionics, parts, refurb, charter, flight school, aircraft sales, accounting, etc.
In consulting with many FBOs with which we've come in contact, several managers have lamented that departments often don't communicate well with each other and have tended to work more and more in isolation. In other words, they're tapping out a rhythm to their own beat, not in concert with the rest of the orchestra. In a way, they've created their own ensemble and aren't playing the same music.
When the customer spends some time at an FBO, they begin to develop a sixth sense with regard to the working environment. Their antennas are up and they can sense when there is discord. They begin to hear many drums and many instruments playing haphazardly instead of in sync as one sound, one orchestra, one FBO.
So how can FBOs pull the orchestra together, make many departments move and sound as one, and create an operating environment for delivering the ultimate customer service experience?
In the next blog, we'll discuss the four steps to creating inter-departmental harmony and discovering your FBO’s natural rhythm.
About the bloggers:
John Enticknap has more than 35 years of aviation fueling and FBO services industry experience. Ron Jackson is co-founder of Aviation Business Strategies Group and president of The Jackson Group, a PR agency specializing in FBO marketing and customer service training. Visit the biography page or absggroup.com for more background.
FBO Tip of the Week: Take Time for a Midyear Checkup
/By John L. Enticknap and Ron R. Jackson, Principals, Aviation Business Strategies Group
Now that we're halfway through 2015, it's time to take stock of how your FBO has performed this far and review your goals and objectives for the year.
This midyear review is an excellent opportunity to take a look at all aspects of your business and review the metrics that give you a relative benchmark of performance.
Fuel Sales: Utilizing your dashboard and YTD budget reports, compare fuel sales for each of the first six months against the results of the first six months for 2014 and your budget forecast. Are you trending up or down or maybe staying about the same? Are you going to hit your sales targets?
Fuel Pricing: Review your posted retail pricing for each month, and complete a market survey, both on the field and in the region.
Fuel Discounts: Figure the average of what you actually sold a gallon of fuel for, taking into account all discounts including contract fuel pricing, etc. You also may want to break out these costs by category to include base customers, transient customers, contract fuel, commercial into-plane and government/DOD.
Review all your expenses: Remember to include wages/salaries, utilities, building maintenance, insurance, supplies, rent/lease, loan payments, etc. Are they in line with your YTD budget?
Recalculate what each gallon of fuel costs to pump into an aircraft.
Figure Your Fuel Margin: Compare these margins YTD with the results of 2014.
MROs: Figure your hourly productivity rate for your shop and each technician for the first six months of this year. Compare these findings against the results of 2014. How are you trending?
Review Your Airport Lease: Now is a good time to think about negotiating a lease extension.
Review Capital Improvements: Are you on target to start or finish your capital improvement projects?
Review Safety Procedures: Now is a good time to conduct an internal audit of your safety procedures.
Insurance Review: Call your insurance agent, and get together to review your insurance story. A good insurance story can save you money.
Review Your Credit Card Transactions: Are your CSRs asking customers for the preferred card? The one that has the lowest interest/processing rates?
Review Your Base Tenant Leases: Have the leases renewed at the same rate or is there opportunity to negotiate better terms?
Review Your Customer Service Training: Take time to observe how your employees communicate and deal with your customers. Are your customers willing to recommend you without hesitation?
Now, tell us how you are doing. We'd like to hear from you to get a sense of how the industry is doing. Have you had more transient traffic these first six months compared to the same period in 2014? Do you have an opinion of whether there is an increase of in-flight hours compared to last year? Are fuels sales better, worse or about the same?
About the bloggers:
John Enticknap has more than 35 years of aviation fueling and FBO services industry experience. Ron Jackson is co-founder of Aviation Business Strategies Group and president of The Jackson Group, a PR agency specializing in FBO marketing and customer service training. Visit the biography page or absggroup.com for more background.
FBO Tip of the Week: Example of Contagious Company Culture: You've Got to Love Southwest Airlines, Part 3 of 3
/By John L. Enticknap and Ron R. Jackson, Principals, Aviation Business Strategies Group
In this final blog post about developing a contagious company culture, we'd like to share a short case study of a celebrated aviation services company that has put it all together and shines above the rest: Southwest Airlines.
True, they're not in the FBO business, but for the sake of this blog post, let's call them kissin' cousins.
- Company: Southwest Airlines
- Commenced Operations: 1971
- Years in business: 44
- Years of Profitability: 41 plus and counting
- Market Positioning: Low-cost fares
- Market Positioning Symbol: Peanuts
- Founder/Figurehead: Herb Kelleher
Many have attributed the contagious company culture instilled at Southwest Airlines to Kelleher, a rather colorful business figure who once accepted the challenge of Kurt Herwald, then the president of the FBO/MRO Stevens Aviation, to an arm wrestling match for the right to use a marketing phrase: Just Plane Smart.
"A company is stronger if it's bound by love rather than fear,” Kelleher has said while describing the internal culture at Southwest Airlines.
Perhaps coincidentally, Southwest started its operations at Love Field (DAL), Dallas, Texas, and still marries the heart symbol/graphic with its brand name.
Not so coincidental is Southwest's consistent profitability and its reputation for extreme customer loyalty. The two harmoniously go together, like peas and carrots. And at the heart of its customer loyalty is an internal culture that thrives on purpose.
In past blog posts we've talked about developing a company vision statement that is forward looking and describes what a company wants to become. Southwest's vision statement is: "Our vision is to become the world's most loved, most flown and most profitable airline."
But Southwest also created a purpose statement that essentially states why a company exists: "We exist to connect people to what's important in their lives through friendly, reliable and low-cost air travel."
Both the vision and purpose statements are meant to inform and inspire the primary employee stakeholder group. And to drive home the basic tenets of the purpose statement, Southwest developed a series of short videos. Although you can find them on YouTube, they are primarily targeted for viewing by employees.
They're slices of life and highlight the efforts of employees who go the extra mile because the internal culture inspires and gives them permission to do so without hesitation. Click here to view the video about the company’s vision and purpose statements.
In summary, a contagious company culture is one that is contingent upon a management style that nurtures instead of controls. It acknowledges and celebrates its employees’ strengths and encourages good employee behavior while recognizing their contributions.
As we teach in our Don't Forget the Cheese! FBO customer service training program, what employees seek most from an employer is not a monetary reward, but simple recognition of a job well done.
What has your FBO done to create an outstanding company culture? Let us know in the comments.
About the bloggers:
John Enticknap has more than 35 years of aviation fueling and FBO services industry experience. Ron Jackson is co-founder of Aviation Business Strategies Group and president of The Jackson Group, a PR agency specializing in FBO marketing and customer service training. Visit the biography page or absggroup.com for more background.
FBO Tip of the Week: Team Chemistry-A Key Component of Contagious Company Culture, Part 2 of 3
/By John L. Enticknap and Ron R. Jackson
Aviation Business Strategies Group
In Part 1 of this series, we said a spirited and contagious company culture is essential in delivering a great customer service experience because it sets the tone and feeds the passion of the operation.
A key component of this type of culture is team chemistry. Good, athletic teams with winning cultures will often point to their internal chemistry as a factor for their success.
But where does good team chemistry come from? How does it take hold and why does it flourish in some companies and not in others?
Certainly, having the right combination of team members plays a big part. But perhaps more importantly is having the right management team in place that's been trained or knows intuitively how and when to nudge the ship in the right direction. It’s important to lead by example, set the tone, act and react consistently, and recognize and reinforce good behavior.
FBO management that has a team-oriented mindset will effectively infuse a healthy culture into the organization where it becomes infectious and adopted by the stakeholder employees.
Many companies try to impose repair for their internal culture problems by attempting to manipulate the behavior of their employees. Quick-fix gimmicks like providing monetary rewards or merchandise incentives may alter a behavior pattern in the short term, but the effects are often short lived and it doesn't take long for the same old habits to find their way back into the culture.
The remedy? Change the cultural mindset; cure the problem.
Changing the cultural mindset is a conscious decision and, yes, it can be done. In other words, the manager or management team first has to be able to recognize when there is an internal cultural problem. As mentioned in Part 1 of this series, an independently administered SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis will help determine what's working and what's not.
Then the management team has to be willing to adopt a cathartic or energizing process that involves all the employee stakeholders. When employees feel their opinions count, an adjustment in mindset takes place. They become more open to change.
Remember, it's not the chemistry of each individual team member that counts. What matters most is the team chemistry that thrives collectively and is managed wisely.
In our next blog post, we'll provide an example of an aviation company where team chemistry flows freely and is highly contagious.
About the bloggers:
John Enticknap has more than 35 years of aviation fueling and FBO services industry experience. Ron Jackson is co-founder of Aviation Business Strategies Group and president of The Jackson Group, a PR agency specializing in FBO marketing and customer service training. Visit the biography page or absggroup.com for more background.
FBO Tip of the Week: The Key Elements to Pricing Fuel
/By John L. Enticknap and Ron R. Jackson
Aviation Business Strategies Group
As we have all seen, the cost of Jet A fuel on the world markets started to fall more than 10 months ago and hit the lowest point in January. Since then, the price has been inching up.
By keeping an eye on the fuel market, FBOs can avoid falling short of their profit goals. As we know, the base price for a gallon of Jet A was as low as $1.48 a few months ago. With a Platts price of around $1.90 today, FBOs are paying approximately 42 cents per gallon more, which means an average load of fuel has gone up $3,500.
Because fuel sales drive FBO profitability, it’s imperative we keep a constant vigil on the key elements to pricing our fuel:
- A consistent review of posted prices in your market.
- Tracking your cost of fuel load-by-load and knowing what's in your tank.
- Calculating the true cost to pump that fuel.
- A realistic review of your contract fuel.
At our most recent NATA FBO Success Seminar in March, we forecast that the price of oil was poised for a relatively steady recovery following the recent collapse to under $50 per barrel. Based on market intelligence, including a report by the International Energy Agency (IEA), the recovery will not come close to returning to the highs of past years. In the IEA report, the Paris-based organization of 29 major oil importing nations said the fuel price rebound “will be comparatively limited in scope, with prices stabilizing at levels higher than recent lows but substantially below the highs of the last three years.”
With the continued volatility of Jet A fuel markets, FBOs need to conduct fuel surveys. Many online fuel pricing resources, such as those posted by AC-U-KWIK and others, provide relative survey data that is generally very good for benchmarking the marketplace. With these resources you get instant feedback on the range of pricing in your area plus the average price.
With this type of information, you can complete a simple price formula calculation. For example:
Base Price (Platts or Spot Jet A Price): $1.90
Supplier differential: $0.15
Transportation: $0.10
Fed & State Taxes: $0.337
Flowage Fee: $0.09
Total Cost of Fuel: $2.577
Plus Gross Profit Projected: 2.25
Calculated Retail Price: $4.83
Jet A
$3.30-$7.52
average $4.86
In this example, the projected posted price is just about average. For an FBO that has recently invested in new infrastructure and employee enrichment, such as a new hangar and customer service training, a realistic Jet A posted retail price could easily be $4.98. Now you can start your discounts from there.
However, as we counsel our FBO clients, don’t give away all your services. Every customer who comes on your ramp must contribute to your revenue stream in some way, especially the reluctant customer that doesn’t buy fuel.
Therefore, keep your costs in mind. Knowing your costs to pump fuel is key. With this knowledge you can apply your margin/into plane fee to the contract providers price. Then your business will be lean, mean and profitable!
Give us your feedback; we always like to hear your comments and read our eBook; “FBO Survival, Keep Your Operation Lean Mean & Profitable.”
About the bloggers:
John Enticknap has more than 35 years of aviation fueling and FBO services industry experience. Ron Jackson is co-founder of Aviation Business Strategies Group and president of The Jackson Group, a PR agency specializing in FBO marketing and customer service training. Visit the biography page or absggroup.com for more background.
Tip of the Week: Our Top 10 Tips eBook
/By John L. Enticknap and Ron R. Jackson
Aviation Business Strategies Group
For the last few years, we have written FBO Survival Tips that focus on the various strategies and tactics needed to survive the daily rigors of running a successful fixed base operation. After some great feedback, we decided to compile the 10 most popular tips into a comprehensive ebook resource for the FBO industry.
We are very proud to introduce FBO Survival: 10 Tips to Keep Your Operation Lean, Mean and Profitable. This book was made possible by the good folks at AC-U-KWIK and Penton.
Acknowledging that market and economic conditions often dictate the size and scope of an operation, this book will help the FBO owner, operator and manager prepare for both the best of times and the worst of times and keep them focused on running a successful FBO.
In this book you’ll find 10 of our most popular tips as well as a bonus section, 3 Keys to FBO Success. Also included are some dashboard report templates you can use to keep track of your operation on a daily basis.
The book is available as a digital download at Amazon.com. Here is a thumbnail overview of each of the 10 tips:
FBO Survival Tip #1: Keep Your Customers Close and Your Margins Closer
In order to survive in any economic climate, FBOs should focus on the two most important revenue generators: valued customers & fuel margins.
FBO Survival Tip #2: Avoid the “Ready, Fire, Aim” FBO/MRO Syndrome
To generate profitable transactions, FBOs must communicate across the enterprise, figure costs accurately and not overpromise.
FBO Survival Tip #3: Don’t Give it Away!
As fuel margins get squeezed by aircraft operators and fuel broker discount programs, FBOs need to charge for “free services” instead of giving them away.
FBO Survival Tip #4: Develop an Early Warning System
A crucial FBO survival strategy involves developing early warning reporting metrics designed to keep your fingers on the pulse of FBO operations.
FBO Survival Tip #5: Prepare to Operate in Your New Normal
After every major economic downturn, FBOs must establish a new operating benchmark that becomes their new normal moving forward.
FBO Survival Tip #6: Take Off the Blinders
FBO operators and managers can’t effectively run their facility without getting involved by walking around to gain a customer’s perspective.
FBO Survival Tip #7: Ask the Tough Questions!
If you don’t know what your customers think of your FBO operation, then you’re not asking the really tough questions.
FBO Survival Tip #8: Be a Savvy Business Operator
The FBO owner and manager should know and understand all aspects of the operation and what drives business profitability.
FBO Survival Tip #9: Avoid the Status Quo
About the time an FBO operator thinks things are running smoothly, that’s the time complacency sets in and things begin to slide.
FBO Survival Tip #10: Sharpen Your Negotiation Skills
Building successful stakeholder relationships in the FBO business often includes skillful negotiations. Sharpening these skills and thinking win-win are critical elements to getting what you want.
FBO Survival Bonus: 3 Keys to Success
As an FBO Survival book bonus, the authors have detailed 3 fundamental keys to FBO operational success.
About the bloggers:
John Enticknap has more than 35 years of aviation fueling and FBO services industry experience. Ron Jackson is co-founder of Aviation Business Strategies Group and president of The Jackson Group, a PR agency specializing in FBO marketing and customer service training. Visit the biography page or absggroup.com for more background.
Tip of the Week: Watch Your Discounts—Do the Math!
/By John L. Enticknap and Ron R. Jackson
Aviation Business Strategies Group
There’s a syndrome that is unique to the FBO industry. We call it the false-positive fuel pricing syndrome where the posted price is not really the selling price.
Show us another industry that establishes a pricing structure for its main product, publishes it online, feeds it to informational websites, posts it on a board in the store, and then completely ignores it when making the sale. Although this practice appears to be contrary, divergent thinking, it’s standard operating procedure for most FBOs.
When discounts are freely given to fuel brokers, base customers and transient customers, who’s left? At the end of the day, heavy discounts have eaten into the margins that were built into the posted price.
Pricing studies indicate that discounting posted prices may gain more customers but in the long-run the business is less profitable. “Making it up on volume” is a phrase we’ve all heard but this seldom works, especially in a very niche market like the FBO industry where the number of daily transactions is counted in tens instead of hundreds or even thousands.
Threaded below is an example of what a business needs in terms of additional customers to breakeven when a discount is given.
Before the Price Discount with 1,000 customers:
- Price per unit: $200
- Cost per unit: $150
- No. of customers: 1,000
- Gross income: $200,000
- Direct Costs: $150,000
- Gross Profit: $50,000
After the Price Discount with an additional 250 customers:
- Price per unit: $190
- Cost per unit: $150
- No. of customers: 1,250
- Gross income: $237,500
- Direct Costs: $187,500
- Gross Profit: $50,000
That’s an extra 250 customers you’ll somehow need to woo with your new low prices, just to stay even!!!
In the FBO industry, we’ve encountered many FBOs who have lost price-sensitive customers but have become more profitable by selling higher margin fuel on fewer transactions.
If the math does not convince you to be very cautious with discounting, consider these facts concerning price buyers:
- They are the least loyal customers.
- They complain more than premium price buyers.
- They expect more than premium buyers.
- They take up more of your time and distract from the time you need to spend with premium price buyers.
FBO operators should keep these concepts in mind as part of the planning and management of the enterprise. Remember, a 5 percent discount will require the FBO to pump at least 20 percent more gallons just to maintain anticipated profit. The question is, where will you get these customers?
About the bloggers:
John Enticknap has more than 35 years of aviation fueling and FBO services industry experience. Ron Jackson is co-founder of Aviation Business Strategies Group and president of The Jackson Group, a PR agency specializing in FBO marketing and customer service training. Visit the biography page or absggroup.com for more background.
Tip of the Week: Give Customers Your Best Cheese!
/By John L. Enticknap and Ron R. Jackson
Aviation Business Strategies Group
At the recent NATA FBO Success Seminar, we had a roundtable discussion where attendees shared their best practices in delivering a good customer service experience.
We called the session “What’s Your Cheese?”
If you are a regular reader of our AC-U-KWIK FBO Connection blog, you know we’ve developed a customer service training program called Don’t Forget the Cheese!©. It’s a fun, memorable program developed specifically for aviation service companies who want to improve their service experience. (Click here for the link to a past blog which explains the origins of the program and provides further background.)
As part of the training, we challenge FBOs to compete on customer service, not on price. One of the best ways to compete on customer service is to make your customer service experience uniquely unique. In other words, no one else can duplicate exactly what you do in the way that you do it. It’s unique to your style, your very own way in which your FBO delivers your customer service experience.
In a way, it’s your exclamation point! And it’s the answer to the question, “What’s Your Cheese?”
Threaded below is a sampling of what the NATA FBO Success Seminar attendees shared when asked, “What’s Your Cheese?” Here’s what they said:
- Our crew cars are unique. We even have an old police cruiser that’s very popular. A lot of get up and go!
- Our cheese is developing a home atmosphere, relaxed and comfortable.
- We send hand-written thank you notes and remember our customer’s birthdays.
- Customers, as well as employees, look forward to our quarterly barbecues.
- Our flying Santa is our cheese. It’s unique to us. Each Christmas we tow it around.
- We have a GPS in every crew car, preloaded with eating and entertainment destinations.
- The piano in our lobby is a good example of our cheese and providing something extra. We invite musicians to play for the entertainment of our customers during a busy ski season.
- Repeat customers are greeted with a big hello and we make it a practice to remember their names. That’s adding some good cheese.
To further this discussion, we’d like challenge you to share "what’s your cheese." Simply give us your best cheese at the end of this blog and check back often to see what others have written.
About the bloggers:
John Enticknap has more than 35 years of aviation fueling and FBO services industry experience. Ron Jackson is co-founder of Aviation Business Strategies Group and president of The Jackson Group, a PR agency specializing in FBO marketing and customer service training. Visit the biography page or absggroup.com for more background.
Tip of the Week: Keep Your Fuel Margins Closer
/By John L. Enticknap and Ron R. Jackson
Aviation Business Strategies Group
Last week, our blog post discussed how keeping your customers close by diffusing disputes at the point of transaction made for good business. For this post, we’ll discuss how keeping your fuel margins closer makes good business sense. It’s really kind of a parody of the famous line from the film, “The Godfather: Part II,” “Keep your friends close and your enemies closer.”
At first blush, keeping your customers close and your margins closer are two axioms that don’t seem to go together. What does one have to do with the other? The answer is simply that each day FBO operators must keep their fingers on the pulse of their operations. Keeping customers happy is just as important to the bottom line as keeping track of fuel margins and managing closely what’s in the tank.
As we all know, a healthy fuel margin is hard to come by these days. On one hand you have savvy aircraft operators who fly more fuel-efficient aircraft, tanker fuel from their own fuel farms and ask for aggressive fuel discounts when purchasing fuel.
On the other, you have the fuel brokers with their own sets of customers, negotiating significant fuel discounts off the posted price and taking a piece of the action while cutting deep into your margin.
And then there’s the airport authority wanting to increase into-plane fees while planning to add another competing FBO at the airport, even though fuel sales have been relatively flat for the past seven years.
Sound familiar? It’s enough to make most FBO operators say, “Enough is enough!”
FBO operators should know and manage the cost of each fuel load that is in the tank farm and be able to adjust their posted price accordingly while remembering to keep their target margin consistent.
Therefore, this should be your daily mantra, “Today, I will keep my customers close while remembering to keep my fuel margins closer.” It’s just good business sense.
About the bloggers:
John Enticknap has more than 35 years of aviation fueling and FBO services industry experience. Ron Jackson is co-founder of Aviation Business Strategies Group and president of The Jackson Group, a PR agency specializing in FBO marketing and customer service training. Visit the biography page or absggroup.com for more background.
FBO Success Seminar Provides Strategy and Networking
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John Enticknap discusses lease agreements at the 2015 NATA FBO Success Seminar in Las Vegas.Ron Jackson and John Enticknap presented the NATA FBO Success Seminar in Las Vegas on March 9-10.
NATA posted additional photos on its Safety 1st Program blog.
Tip of the Week: Make Your FBO Data Driven
/By John L. Enticknap and Ron R. Jackson
Aviation Business Strategies Group
Just as pilots rely on the instrument panel to keep up and stay ahead of potential problems, FBOs should rely on data-driven dashboards to do the same thing.
Operational and financial data fed on a regular basis to the FBO operator is an essential element of running a successful business. They’re a quick snapshot you scan to make sure the engine of your company is running smoothly.
Setting up a dashboard is similar to a pilot setting up waypoints. You preselect the data you want to see and have it delivered to your desktop on a daily basis.
Here are some suggested data points to set up on your dashboard:
Line Service Business
- Review your previous day’s retail fuel sales.
- Contract Fuel Sales.
- Airline Fuel Uplift.
- Month-to-Date retail fuel sales.
- MTD Contract Fuel Sales.
- MTD Airline Fuel Uplift.
- Budget retail fuel sales, contract and airline fuel sales.
- Number of Customer Contacts Yesterday.
Maintenance Business
- Mechanic Hours Billed yesterday.
- Mechanic hours of vacation, paid leave.
- Mechanic hours paid.
- Yesterday Mechanic Productivity.
- Month-to-Date Productivity.
- Budget Productivity.
- Parts Sales Dollars.
- Budget Parts Sales.
- Support Staff hours paid.
- Number of Customer Contacts.
- Number of annuals/100 hr./inspections bid.
Flight Operations
- Flight Instructor hours billed yesterday.
- Flight Instructors hours paid.
- Flight Instructor Productivity.
- Charter hours billed.
- Charter hours available.
- Charter Productivity.
- Customer Contact - Flight Instruction.
- Sale Contacts for Charter.
You’ll notice we are getting sales data, labor data and marketing data. After cost of sales, labor is your biggest expense. Labor hours must be reviewed and managed to assure you maximize productivity.
Also, you must keep track of your marketing activity. This is something you should touch on daily, focusing on both retention of existing customers and obtaining new customers. We know this is stating the obvious, but if you don’t grow, you go out of business. Every year there can be as much as a 30 percent churn in turnover of base customers and regular transient customers.
In setting up your dashboard data requirements, make the adjustments with your accounting personnel as well as department managers to collect this data.
If you are uncertain as to how to set up a dashboard properly as well as the interpretation of the data, we suggest you attend an NATA FBO Success Seminar. The next seminar is scheduled for March 9-10 in Las Vegas. At these seminars we suggest a number of simple strategies and tactics to assist you with data management.