FBO Operations Tip: Managing Your FBO Fuel Prices in a Volatile Market

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No doubt you have noticed the increase in fuel prices. Since the beginning of year, Jet A has increased by more than 20 cents per gallon.

The impact on your FBO can be felt in cash outlay. For instance, if you recently purchased an 8500-gallon load of Jet A, you probably paid $1700 more than in early January.

If you haven’t been diligent about tracking fuel prices and adjusting your posted price along the way, a $1700 hit to the bottom line is substantial. What about increasing those contract prices that always seem to be too low?

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Mid-Year FBO Fuel Sales Survey: 71 Percent of Respondents Report Increased or Flat Fuel Sales

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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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