Why Office Space Is Premium Space at Your FBO

Part Two of the Four-Part Crafting Advantageous Hangar, Office and Tie-Down Agreements Series

By John L. Enticknap and Ron R. Jackson, Principals, Aviation Business Strategies Group

In our previous blog, we wrote about developing a favorable hangar agreement as the lead post for our new series about crafting advantageous hangar, office and tie-down agreements, which together are the third component of the six intangibles that can build equity in your FBO.

In this post, we center in on crafting an advantageous office lease agreement.

As with a hangar lease agreement, an advantageous office lease agreement can help generate passive rental income for the FBO. Therefore, it should stand as a separate but complementary component if it is to be tied to a hangar lease package for a flight department.

In determining the value of an office space to be let, keep in mind that an office area is really premium space. It is often finished out and is heated, cooled and may be plumbed for hot and cold water as well as lavatory facilities.

An FBO has a couple of options to consider when leasing commercial office space. First, a triple net formula is often applied that takes into consideration the tenant or lessee agreeing to pay all real estate taxes, building insurance and maintenance in addition to any normal fees that are expected under the agreement  to include rent, utilities, etc. In such a lease, the tenant may be responsible for a portion or all costs associated with the repair and maintenance of any common area.

The second option for a prospective tenant would be for the utilities, taxes, repair and maintenance to be included in the rental cost. This may be a simpler option for office space that is part of an office/hangar building. Multiple offices in a building may not have separate meters for electricity or water and may include multiple common areas such as lobbies, elevators, etc. The key issue for the FBO is knowing its costs of the facilities. They include the common areas and expenses for utilities debt service, lease costs, etc.

It’s important to keep in mind that like hangar agreements, FBOs should not devalue the true worth of office space in order to please a current or potential base tenant who wants a deep discount for the space based on promised potential fuel sales. It’s better to hold the tenant to measureable specific fuel sales goals that are spelled out in the agreement when considering any rent discounts.

As with hangar lease agreements, office lease agreements are a sublease and must conform to the master lease agreement your FBO has with the airport authority. Signatories to office subleases do have a right to know the contents of your master lease because they must also comply with its contents. In addition, terms for rate increases in your subleases should be similar to the master lease, and the term of subleases cannot be longer than the master lease term.

Please keep in mind that there are many factors and nuances to crafting an advantageous office lease agreement, and we will not be able to expound on all of them in the framework of a blog. Therefore, we encourage you to attend one of our FBO Success Seminars where we spend additional time discussing these important topics as well as others.

If you have a comment you'd like to share, please do so in the space provided 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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How FBOs Can Craft Advantageous Hangar Agreements

Your Hangar Sits on Golden Ground

Part One of the Four-Part Crafting Advantageous Hangar, Office and Tie-Down Agreements Series

By John L. Enticknap and Ron R. Jackson, Principals, Aviation Business Strategies Group

In our previous blog, we concluded our four-part series on the 10 essential elements of a favorable fuel supplier agreement, which is the second component of the six intangibles that can build equity in your FBO.

In this blog post, we begin a new series about the third component, crafting advantageous hangar, office and tie-down agreements. Let’s start with the hangar agreement.

Hangars are among the most important real estate investments from which an FBO can generate true passive rental income. Therefore, the hangar footprint is golden ground to the FBO enterprise.

Too often, FBOs devalue the true worth of a hangar agreement. In the process of trying to please a current or potential base tenant, FBO owners and managers will provide a deep discount on hangar rent based on fuel sales potential. That’s why it’s important that the details of potential fuel sales be spelled out in the hangar agreement with specific language based on measurable fuel sales milestones.

Hangar lease agreements are a sublease and must conform to the master lease agreement your FBO has with the airport authority. Signatories to hangar subleases do have a right to know the contents of your master lease because they must also comply with its contents. In addition, terms for rate increases in your subleases should be similar to the master lease, and the term of subleases cannot be longer than the master lease term.

FBOs should have a more detailed agreement for the lease of an entire hangar complex to an individual or flight department, especially if the agreement is for a multiple-year term. Just as you have a written agreement with your airport authority, all prospective tenants should have written agreements for space within your FBO. In addition, FBOs should develop a rules and regulations document that spells out the dos and don’ts of tenants. Our final blog in this series will detail the rules and regulations section.

As part of your evaluation to determine rates and charges, it is imperative that FBOs determine the true cost of your real estate, including your hangars. Costs of the underlying land lease, construction or rent, maintenance, taxes, and utilities are all part the calculation. All these costs should be detailed and broken down on a per-square-foot basis.

FBO owners and managers should conduct a market study of comparable local and regional rental rates to determine the final rental cost to offer to the tenant. As mentioned, we recommend leasing your hangars for a profit and not subsidizing the lease cost based on potential future fuel sales. Instead, commit your lessee in writing to specific fuel uplift targets at an established price. Then detail an alternate pricing method that would go into effect if the targets are not met.

Please keep in mind that there are many factors and nuances to crafting an advantageous hangar lease, and we will not be able to expound on all of them in the framework of a blog. Therefore, we encourage you to attend one of our FBO Success Seminars where we spend additional time discussing these important topics as well as others.

If you have a comment you'd like to share, please do so in the space provided 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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Essential Fuel Supplier Agreement Elements: Contract Fuel Programs

Part 4 of 4: Detailing the 10 Essential Elements of a Favorable Fuel Supplier Agreement

By John L. Enticknap and Ron R. Jackson, Principals, Aviation Business Strategies Group

Publisher’s note: Our bloggers, John Enticknap and Ron Jackson will be discussing these topics and others affecting the FBO Industry at the next NATA FBO Success Seminar, March 8-9, New Orleans.

Previously, we talked about nine of the 10 essential elements of a favorable fuel supplier agreement: Term of agreement, pricing methodology,  transportation and delivery, terminal locations, credit terms taxes, quality control/training, marketing support and credit card processing. A favorable fuel supplier agreement is one of the six intangibles that can build equity in your FBO.

For this blog post, we’ll discuss the final element of the favorable fuel supplier agreement, contract fuel programs, and provide insight and tips to help you protect your business while adding intrinsic value.

Contract Fuel Programs

When it comes to developing the contract fuel programs section of your fuel supplier agreement, keep in mind you have the ability to define the program or programs that make the most sense for your FBO. Too often, FBOs accept without question what is written in the agreement.

Here are a few tips:

1. Do your homework. Know the amount of gallons you are pumping to contract customers. Are they based customers, all transient, fractionals such as NetJets or Flight Options, FAA Part 135 operators, or something else?
2. Contract fuel suppliers do not operate for free. Before you establish your pricing, ask the question: What additional fee(s) are being added on to your already established FBO fees for a final price to the end customer? Extra fees can be substantial.
3. Determine what margin you want to receive for all your labor and cost of delivery. That means you must figure out what it costs you to pump a gallon of fuel. Use a simple formula by adding up all of your line service costs and divide that number by your total fuel pumped.
4. Are you being paid according to the contract including being paid promptly and no fees for processing?
5. If you have based customers on a contract fuel program, it might be more profitable for you to negotiate your own discount rate and, in the end, make a better margin.
6. Maintain a before and after record of non-contract fuel sales versus contract fuel sales. Are you selling more gallons at a reduced margin? If so, how much? Sometimes it’s beneficial to sell less fuel at a greater margin by reducing or eliminating contract fueling altogether. In the end, you may make a greater profit.
7. Keep your contract fuel agreements short, no longer than one year. The market is ever changing and one year contracts, to some extent, force you to reevaluate your pricing structure.

Please keep in mind that there are many factors and nuances and we will not be able to expound on all of them in the framework of a blog. Therefore, we encourage you to attend our next NATA FBO Success Seminar, March 8-9 in New Orleans, where we spend additional time discussing these important topics as well as others.

If you have a comment you'd like to share, please do so in the space provided 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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Essential Fuel Supplier Agreement Elements: Quality Control/Training, Marketing Support and Credit Card Processing

Detailing the 10 Essential Elements of a Favorable Fuel Supplier Agreement, Part 3

By John L. Enticknap and Ron R. Jackson, Principals, Aviation Business Strategies Group

Publisher’s note: Our bloggers, John Enticknap and Ron Jackson will be discussing these topics and others affecting the FBO Industry at the next NATA FBO Success Seminar, March 8-9, New Orleans.

Previously, we talked about six of the 10 essential elements of a favorable fuel supplier agreement: Term of agreement, pricing methodology,  transportation and delivery, terminal locations, credit terms and taxes. A favorable fuel supplier agreement is one of the six intangibles that can build equity in your FBO.

For this blog post, we'll break down three additional elements of the favorable fuel supplier agreement and provide insight and tips to help you protect your business while adding intrinsic value.

Quality Control and Training

Putting safety first is paramount in developing a good relationship with your fuel supplier. Often your fuel supplier will have resources to help you train your employees in all aspects of the fuel delivery process to help insure not only safety but the quality of the product as well. Your fuel supplier agreement should detail what type of training program they will provide. It may include their own program or supplement your own in-house safety and quality assurance program such as NATA Safety 1^st. Determine during your fuel contract negotiations what quality program your fuel supplier will provide. For example, will they come to your facility for training or just conduct an audit? Will they complete quality assurance seminars and at whose expense — yours or theirs?

Marketing Support

Many fuel suppliers offer support for marketing your facility and their brand of fuel. This support often comes  in the form of a co-op program that creates a marketing fund based on your fuel volume. Like many parts of your fuel agreement, the terms or percentage of fuel sales put into these funds by the fuel supplier is somewhat negotiable. We suggest you have a well thought-out marketing program in place to help your negotiations.

Credit card processing

If you want to have a real impact on your bottom line, watching your credit card processing fees is a very important factor. Here are a few tips to keep in mind when you come to this part of your fuel agreement:

1. These fees are negotiable.
2. Do your research on what your fees are prior to negotiating with your fuel supplier or local bank.
3. Train your CSR staff to ask for the no-fee card or card with the lowest fee.

Keep in mind that there are many factors and nuances, and we will not be able to expound on all of them in the framework of a blog. Therefore, we encourage you to attend our next NATA FBO Success Seminar, March 8-9 in New Orleans, where we spend additional time and discussion on these important topics as well as others.

If you have a comment you'd like to share, please do so in the space provided 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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Essential Fuel Supplier Agreement Elements: Terminal Locations, Credit Terms and Taxes

Detailing the 10 Essential Elements of a Favorable Fuel Supplier Agreement, Part 2

By John L. Enticknap and Ron R. Jackson, Principals, Aviation Business Strategies Group

Previously, we talked about three of the 10 essential elements of a favorable fuel supplier agreement: Term of agreement, pricing methodology, and transportation and delivery. A favorable fuel supplier agreement is one of the six intangibles that can build equity in your FBO.

For this blog post, we'll break down three additional elements of the favorable fuel supplier agreement and provide insight and tips to help you protect your business while adding intrinsic value.

Terminal locations

The location of fuel terminals is essential to understanding the transportation cost element of every gallon of fuel you purchase from your supplier. When you talk to your fuel supplier you should establish both a primary and secondary fuel terminal for distribution of your Jet fuel. You need to make sure that the terminals have the storage capability for your product as well as locations within a reasonable distance of your FBO. Know the cost of transportation from each of the terminals as well as any surcharges and extra waiting expense. The cost per mile can be different for each common carrier; therefore, you need to manage this cost. Of course, your fuel supplier may want to assure themselves of good quality control by the carriers, but most all common carriers of aviation fuel are aware of quality control issues and utilize dedicated trucks and trailers. Avgas may come from a long distance due to the limited refinery capacity in the United States. Therefore, the cost of transportation for this fuel type may not be as negotiable as the cost for Jet-A.

Credit terms

Did you know the credit terms provided in your fuel agreement can be negotiated? Providing good financial statements is the primary key and can assist you in discussions with your fuel supplier. It is standard practice today to use electronic payment methods for fuel and reimbursements back to you of your credit card receipts. This system assures both the FBO and the fuel supplier of prompt payments in accordance with your negotiated credit terms.

Taxes: Federal, LUST, State, Local and Flowage Fees

There are five taxes you have to deal with in your fuel agreement: Federal, state, local, LUST and flowage fees. You can’t do much about the fees set by the federal, state and local governments. The flowage fee is a “tax” because it is imposed by your airport authority. An FBO can try to negotiate the flowage fee with the airport authority, but in many cases it is set by the local government and you just have to pass it along to your customer. There are two methods of payment for flowage fees. The first, and most common, is paid based upon the amount of fuel delivered into storage, and the second method is based upon the amount of fuel pumped into wing.

Keep in mind that there are many factors and nuances, and we will not be able to expound on all of them in the framework of a blog. Therefore, we encourage you to attend our next NATA FBO Success Seminar, March 8-9 in New Orleans, where we spend additional time and discussion on these important topics as well as others.

If you have a comment you'd like to share, please do so in the space provided 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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What FBOs Can Take Away from the NBAA S&D Conference

By John L. Enticknap and Ron R. Jackson, Principals, Aviation Business Strategies Group

The transient business aircraft customer is still the lifeblood of FBO fuel sales. Attracting them to the FBO ramp is the primary reason the annual NBAA Schedulers & Dispatchers (S&D) Conference is heavily attended by FBO owners and operators.

At this year's event, held January 19-22 in Tampa, Fla., we witnessed both a record crowd and a record number of exhibitors. More than 2,800 attendees were kept busy with 29 scheduled educational sessions and 517 exhibitors consisting mostly of FBOs displaying under fuel company banners.

It's truly a symbiotic relationship. The schedulers and dispatchers benefit from numerous educational sessions and scholarships provided by various aviation services companies. The FBOs get to network and meet face to face with the S&D contingency to make a positive impression in order to attract their coveted turbine aircraft fleet.

Of note is the splendid job of the Schedulers and Dispatchers Committee, along with the NBAA, in putting together and running an excellent conference. Every year seems to get better. Hats off to their tireless chairperson for this year's S&D, Eve Gregory, flight services manager, C&S Aviation.

As we conversed with many of the exhibiting FBOs, we were able to get a feel for some of the top opportunities, issues and concerns facing the FBO industry. In order of ranking, with No. 1 being the liveliest topic, we believe the following statements represent the overall opinion of each topic:

Tankering of fuel and more efficient aircraft

• Although we will probably see a slight increase in uplifts this year, we are also seeing a few of the larger customers purchasing fuel at previous stops or tankering fuel from their home base through to their destination.
• We are a transient/resort destination. There is a lower percentage of aircraft taking fuel now than there used to be.

Aging GA owners

• General aviation is losing people that fly. This hurts our Avgas sales. A lot of the old timers are aging out, and there aren't as many younger pilots and owners taking their place due to high costs of airplane ownership.

Facility fees on rise

• There's going to be a bigger spotlight put on the cost of providing facility services that was previously paid via fuel sales. With FBOs dealing with contract fuel pricing and better fuel management by aircraft operators, we are going to have to charge ramp, parking and facility fees.

Contract fueling

• Now more than ever, an FBO seems to have to compete with low contract fuel prices. Also, courtesy fuel purchases are disappearing.

Better customer service

• An FBO that provides a better customer service experience, one that exceeds expectations of the client to some degree, will be fine in this coming year.

Lower fuel prices

• Lower fuel prices have contributed to higher fuel margins if we manage these margins wisely. However, the higher margins are countered by the increased salary that is necessary to keep skilled and experienced workers.
• With lower fuel prices, it proves that fuel is becoming more and more a commodity and no longer the stable source of operational revenue relied on by FBOs for many years.

In addition to attending the S&D Conference, we also released the results of our Annual FBO Fuel Sales Survey. Please click here to see the results.

If you would like to add a comment about the opportunities, issues and concerns facing the FBO industry, please do so at the end of this blog in the comment section.

In addition, we cover many of these topics in detail at our Annual NATA FBO Success Seminar scheduled for March 8-9 in New Orleans. We urge all FBO owners, operators, managers and supervisors to attend this seminar and participate in lively discussions on these topics and others.

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 Fuel Sales Survey: 54 Percent of FBOs Say Fuel Sales Increased in 2015

Fifty-four percent of U.S. FBOs say their fuel sales increased in 2015 compared to 2014, according to the 2016 Annual FBO Fuel Sales Survey results released by Aviation Business Strategies Group at the 2016 NBAA Schedulers & Dispatchers Conference in Tampa, Fla.

Of the 54 percent of FBOs surveyed that reported increased fuel sales in 2015, 23 percent reported a 1 to 4 percent increase, 15 percent reported a 5 to 8 percent increase, and 16 percent reported an 8 percent or greater increase, ABSG principals John Enticknap and Ron Jackson say. Enticknap and Jackson are the AC-U-KWIK FBO Connection bloggers.

The increase in fuel sales in 2015 builds on increases in the two previous years. For 2014, 49 percent of responding FBOs reported a year-over-year increase in fuel sales. Surveyed about 2013, 43 percent of FBOs reported greater fuel sales compared to 2012.

“This is the first time since we started the survey that more than 50 percent of the respondents experienced an increase in fuel sales over the previous year,” Enticknap says.

Although a majority of FBOs reported increased sales, 28 percent of FBOs responding to the survey experienced a decrease in fuel sales in 2015, Enticknap says. The other 18 percent of FBOs says fuel sales were flat.

“This is still a fractured marketplace that is showing some positive signs of recovery,” Enticknap says.

FBOs also provided a forecast for 2016. Most FBOs participating in the survey — 58 percent — say they expect an increase in fuel sales in 2016 compared to 2015, Jackson says. Although no respondents expect to increase fuel sales by more than 8 percent, 18 percent expect a 5 to 8 percent increase, and 40 percent expect a 1 to 4 percent increase.

“Looking ahead, more than 90 percent of surveyed respondents said they expect to have the same or increased fuel sales this year compared to their 2015 results,” Jackson says. “If this forecast holds up, 2016 could prove to be a watershed year for the industry.”

These expectations for 2016 are similar to expectations FBOs had for 2015. One year ago, the Annual FBO Fuel Sales Survey found that 61 percent of FBOs were predicting an increase in 2015 fuel sales. In all, 89 percent had been expecting flat or increased fuel sales in 2015.

When asked about their expectations for the economy in general, 41 percent of the responding FBOs said the economy is not heading in the right direction, and 27 percent have a positive outlook about the economy. The rest — 32 percent — were undecided.

Transients’ Tankering Taking Hold

Finally, Enticknap and Jackson asked about fuel purchases by transient customers in this year’s survey.

“Nearly half the respondents indicated that up to 40 percent of aircraft customers coming onto their ramp did not buy fuel,” Enticknap says. “With the current U.S. FBO business model relying on fuel sales to fund their operation, this is an alarming development.”

Enticknap attributes this phenomenon of aircraft stopping on an FBO’s ramp without a fuel purchase to two factors. More flight departments are choosing to tanker fuel to their destinations and back to their bases. And more jets are more fuel efficient.

To adjust to this trend, Enticknap offers the advice he and Jackson share with FBOs at the NATA FBO Success Seminar: FBOs can charge customers a ramp fee and a fee to use the facility, he says.

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10 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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Breaking Down the 10 Critical Elements of an FBO Airport Lease, Part 4

By John L. Enticknap and Ron R. Jackson, Principals, Aviation Business Strategies Group

In previous blog posts we discussed nine of the 10 critical elements of an FBO airport lease as part of our series on the six intangibles that can build equity in your FBO.

In this final post for this subject, we will discuss the last critical element, Airport Minimum Standards.  The Airport Minimum Standards document is basically what creates a level competitive playing field. It further helps protect the intrinsic value of your enterprise by spelling out the minimum requirements for an FBO or SASO (Specialized Airport Service Organization) operating at your airport and sets the standard of compliance for existing or potential competition.

In essence, it states that if a new operator wants to start an FBO at your airport then they must make the same investment in facilities, pay the same rentals and fees, provide similar services, and operate on the same level as your business.

Although an FBO Minimum Standards document is generally separate from your lease and resides as part of the rules and regulations of the airport, it is important to make sure it is called out in your lease. Many airports do not have minimum standards and this may cause a problem for the existing businesses.

Two important elements of an airport minimum standards document are its purpose and the issuance of a permit, lease or operating agreement.

Purpose

The purpose of minimum standards is to establish and make requirements for general aviation aeronautical activities.  They are established in the public interest for the safe and efficient operation of the airport in order to enhance orderly growth and comply with federal, state and local government legal requirements. It also provides information to parties operating or desiring to operate at the airport. These standards in general establish minimum levels of service that shall be offered in order to protect the public welfare and prohibit irresponsible, unsafe or inadequate services.

Permit, Lease or Operating Agreement

No person, including an aeronautical service operator, shall offer or perform a commercial aeronautical activity, operation or service at an airport without written authority for such service. Such authority will generally be contained in a Permit, Lease or Operating Agreement that has been negotiated between the FBO/SASO and the airport.

Keeping these elements in mind will assist you in maintaining your FBO business no matter what the competition may bring to the airport environment.  Make sure the minimum standards are up to date. Many documents we review for our clients are up to 20 years old.

In our next blog, we’ll start a new series based on the second intangible that can build equity in your FBO: A Favorable Fuel Supplier Agreement.

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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Breaking Down the 10 Critical Elements of an FBO Airport Lease, Part 3

By John L. Enticknap and Ron R. Jackson, Principals, Aviation Business Strategies Group

In previous blog posts we discussed six of the 10 critical elements of an FBO airport lease as part of our series on the six intangibles that can build equity in your FBO.

For this blog post, we'll break down three additional key airport lease elements and provide insight and tips to help you protect your business while adding intrinsic value to your enterprise.

Improvements, New Buildings and Renovations

FBOs should view this section as a way to spell out and secure future equity in their enterprise. Making lease hold improvements, building new facilities and making timely and needed renovations are critical in negotiating a longer lease term and potentially additional optional years.

In this section, it is critical that you consider the best investment in facilities that gains two things:

• Longer lease term
• Return on your investment (ROI)

Having a business plan that details what your goals are will greatly assist you in getting the project financed and approved by your board of directors.

During your evaluation of expansion projects, it is important to keep in mind the goals of the airport authority. Airports like to see investments into the infrastructure of the airport environment, expansion of the business base and job creation. Make sure your project meets these goals and adds to the success of the airport master plan.

Insurance, Indemnity and Hold Harmless Agreement

Protecting your enterprise from unforeseen perils that can expose you to risk and harm is what this section is all about.

Insurance must meet the requirements of the lease. In many cases the lease insurance amount requirement may be too low, such as $2 million or $5 million in aviation liability coverage, auto liability and workmen’s compensation insurance. You should review these requirements with your insurance broker to make sure you are adequately insured and there are no clauses in the agreement that cannot be met. The airport will want to be a named insured on your policy. This is a standard requirement.

Both the Indemnity and Hold Harmless clauses are very important to the FBO. When there are problems at the airport that involve your business and the airport authority, these clauses may come into play. Unfortunately, in many cases the legal language in both of these paragraphs can be onerous to the FBO. The airport may want to be completely indemnified for any actions on its part and held harmless for any acts, gross negligence or misconduct.  Your legal counsel should review this language to make sure you can live with it. In many cases, since you are operating at a government owned facility, the FBO may have to accept less than ideal language.

Environmental Liability

In running the day-to-day FBO operations, owners and operators are constantly dealing with aviation fuels and other chemicals that can be environmentally hazardous. With this in mind, it is important to understand that if you are operating a tank farm system for fuel storage you are required to provide environmental insurance. If you are operating at an older airport and you are new to the facility or the ground, you may want to consider completing a Phase 1 environmental assessment  prior to use. This inspection could be a requirement of your insurance underwriters. Your legal counsel and insurance brokers should review the inspection and subsequent lease language prior to signing an agreement.

In our next blog, we’ll examine the remaining critical element of your lease, the Airport Minimum Standards section. We consider this one of the main six intangibles and will treat this as a separate subject because it is a very important component with distinct elements.

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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Breaking Down the 10 Critical Elements of an FBO Airport Lease, Part 2

By John L. Enticknap and Ron R. Jackson, Principals, Aviation Business Strategies Group

Previously we discussed three of the 10 critical elements of an FBO airport lease as part of our series on the six intangibles that can build equity in your FBO.

For this blog post, we'll break down three more of the airport lease elements and provide insight and tips to help you protect your business while adding intrinsic value to your enterprise.

Payments, Including Rental, Gross Revenue, Flowage Fees and out Years to Include Escalators

By paying attention to the exact wording of this very important element, you can protect yourself from any future disagreements or disputes. Payments may include investments in refurbishment of your terminal building and/or hangars to keep them up to date. Payments may include capital investments for a new hangar or building to exercise lease extensions. These rent payments and additional investments are all financial obligations that contribute to the success or potential failure of your FBO. Please note that each one of these elements is negotiable; therefore, do your homework by getting other comparable FBO leases in your area and region. If you have a competitor at your airport, ask to see its lease. Because it is considered a public record, you can obtain a copy under the Freedom of Information Act (FOIA). Remember, knowledge is the key to negotiating your best rates.

Building/Ramp Maintenance Responsibilities

Be sure to be very specific with the language for this element. Any ambiguity can lead to finger pointing, and the FBO can end up on the short end. If you are leasing buildings owned by the airport, most leases provide for the lessee (FBO) to pay for building upkeep, utilities and taxes. If you operate in the snow belt, it is incumbent on the FBO to understand whose responsibility it is for snow plowing ramps, approach taxiways or other areas.

Be very clear on taxes. In many cases you don’t have to pay property taxes on buildings owned by a city or municipality. In some states you may have to pay school taxes or other fees. Therefore, be clear on defining responsibilities.

Termination by the FBO or Lessor

In this section, it is wise to spell out unequivocally how the lease can be terminated by either party in cases of dispute, natural disaster, fires or other unforeseen events. What is most important is that the parties to the agreement have sufficient time to correct and negotiate any disputes or other occurrences. The “cure” clause should be at least 30 to 60 days to fix problems. This length of time is generally not used if the issues are late payment of rents or fees.

When there are issues, prompt resolution is the best way to solve problems. As Colin Powell once said “Bad news isn’t like wine. It never gets better with age.”

In our next blog, we’ll examine the final three critical elements of your lease with additional tips that can help you build 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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NBAA from an FBO Perspective

By John L. Enticknap and Ron R. Jackson, Principals, Aviation Business Strategies Group

The 2015 NBAA Business Aviation Convention & Exhibition is now in the books, so let's break down the show from an FBO perspective.

With more than 27,000 attendees and over 1100 exhibitors, the show was very lively, and most FBOs exhibiting said they were pleased by the amount of traffic and activity at their booth. In general, the atmosphere was upbeat with several OEM airframe manufacturers introducing new aircraft and reporting healthy orders to help fill their delivery slots going forward.

The one lament that FBOs seemed to repeat was that business jet operators continue to tanker fuel from their home base resulting in only courtesy fuel buys.

As in the past, many look with anticipation to hearing the results of Honeywell Aerospace's Annual Global Business Aviation Outlook, which is traditionally released at the annual NBAA show. Here's a look at some relevant predictions.

First of all, Honeywell states that “as a slow-growth economic environment takes hold across many global markets, the business aviation industry is not immune to its impact."

In past blogs, we've talked about the slow-growing economy and our Annual FBO Fuel Sales Survey backs up this statement. We are seeing some bright spots in select markets while fuel sales continue to grow at a slow pace.

As for new business jet deliveries going forward, Honeywell forecasts up to 9200 new business jet deliveries worth $270 billion over the next 10 years. This is actually a downgrade of 3 to 5 percent over the value noted in its 2014 forecast.

The reason we look at new business jet deliveries is that it's a leading indicator of the need by business jet operators either to replace or upgrade their existing aircraft or to expand their current uplift capability.

Another indicator we watch closely is the used jet market to see if inventories have risen or diminished. This gives us another barometer with which to measure and monitor the current health of the business jet industry.

Honeywell's findings indicate a used business jet market that has stabilized at 10 percent of the existing fleet up for resale, which is significantly down from the 16 percent high-water mark recorded in 2009.

According to Honeywell, operators responding to their survey increased their used jet acquisition plans by about 4 points, equating to 32 percent of their fleets in the next five years. For FBOs/MROs who specialize in avionics and cabin upgrades, this is good news.

Other key global findings in the 2015 Honeywell outlook include:    

• Operators surveyed plan to make new jet purchases equivalent to about 22 percent of their fleets over the next five years as replacements or additions to their current fleet.
• Of the total new business jet purchase plans, 19 percent are intended to occur by the end of 2016, while 17 and 20 percent are scheduled for 2017 and 2018, respectively.
• Operators continue to focus on larger-cabin aircraft classes, ranging from super mid-size through ultra-long-range and business liner, which are expected to account for more than 80 percent of all expenditures on new business jets in the near term.
• The longer-range forecast through 2025 projects a 3 percent average annual growth rate despite the relatively flat near-term outlook as new models and improved economic performance contribute to industry growth.

As we have written previously, the business jet market and the FBO industry is operating in what we are calling a new normal where the U.S. business economy is slowly growing. Increased tankering of jet A fuel by medium and large business jet operators is also part of the new normal. We have heard from Fortune 500 corporate aircraft operators that they tanker up to 70 percent of their fuel from their own corporate tank farm.

Therefore, it's important for FBO operators to provide excellent customer service in order to enhance and increase fuel sales at the point of transaction. FBOs should also look at ways to increase and diversify potential revenue streams in order to garner a greater share of the customer wallet. We will have more on this topic in future blog discussions.

If you attended NBAA, please give us your perspective in the comment section 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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Breaking Down the 10 Critical Elements of an FBO Airport Lease

By John L. Enticknap and Ron R. Jackson, Principals, Aviation Business Strategies Group

In our previous blog, we listed the 10 critical elements of an FBO airport lease as part of our series on the six intangibles that can build equity in your FBO.

For this blog post, we'll break down three of the airport lease elements and provide insight and tips to help you protect your business and add intrinsic value to it.

Term and Option Years

When you approach bankers or investors to help grow your business, one of the first items they will examine is the primary term of your lease and the option years remaining. Whether you're looking to sell your business or make additional capital improvements, the term and option years help form the primary equity foundation of your business. Therefore, rule of thumb is the longer, the better. If you are wanting to sell, investors want to see at least 15 years remaining on your primary lease with at least one five-year option. If you are planning to upgrade or expand your facility, now is the time to negotiate a longer primary lease and tack on one more five-year option. This will give you more time to amortize the cost of capital improvements and put you in a better position to sell down the road.

Operating Rights

Under the Operating Rights section of your lease, you'll find a detail of the services you can provide, the facilities that you are required to have and the required hours of operation. Besides the standard fueling services, most FBOs must also provide ground handling services, hangar services and a terminal facility. 

In addition, many leases require an FBO operator to offer aircraft maintenance, flight training and other special services. If you don't want to provide these services, make sure you have the right to subcontract these out. Also,ifyou don't want to be open 24/7, make sure the hours of operation are detailed in the lease.

Assignment Sale Clause

Any business needs flexibility for its future.  If your business outlook changes, a family legacy becomes altered or you encounter a major life event, you need the option to be able to sell or transfer your FBO business. The sale and assignment clause allows you to do exactly that.

The clause needs to containreasonable language that says you can sell the business to a qualified party with approval in writing, and suchapproval will not be unreasonably withheld. This process can sometimes take months, but, with patience,it can be completed successfully. Note that some airports have elected to charge a substantial fee to both the buyer and seller to complete a lease assignment. 

In our next blog, we’ll examine three more critical elements of your lease with additional tips that can help you build 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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10 Critical Elements of an FBO Airport Lease

By John L. Enticknap and Ron R. Jackson, Principals, Aviation Business Strategies Group

As part of a new blog series, we'll take each of the six intangibles that can build equity in your FBO and give you valuable insight as well as insider tips to help you add intrinsic value to your business.

Starting at the top of our intangible list, developing a long-term lease with your airport authority is the lifeblood of your FBO operation and plays a large part in building equity in your enterprise.

The critical elements of a lease to understand, and that are a part of the negotiating process with the airport authority, include the following:

1. Term and option years
2. Operating rights
3. Payments, including rental, gross revenue, flowage fees and out years to include escalators
4. Building/ramp maintenance responsibilities
5. Assignment sale clause
6. Termination from FBO and lessor
7. Improvements, new buildings and renovations
8. Insurance, indemnity and hold harmless agreement
9. Environmental liability

The tenth critical element, an Airport Minimum Standards document, should be part of your lease. We consider this one of the main six intangibles and will treat this as a separate subject in a future blog because it is a very important component with distinct elements.

In our next blog, we will break down these components with some additional tips to help you negotiate the optimum lease. 

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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Six Intangibles That Can Build Equity in Your FBO

By John L. Enticknap and Ron R. Jackson, Principals, Aviation Business Strategies Group

Running a successful FBO operation requires attention to six intangibles. Reaching favorable terms and taking care of these intangibles the right way will help build equity in your business.

If you’ve ever gone to a bank to get a project financed, you know that it takes a savvy banker who understands the FBO business to get the project done. Most lending institutions can’t get over the first hurdle when they discover that an FBO doesn’t own the land where a proposed hangar is to be built.

To be sure, the FBO business is relatively unique. Often airports require FBOs to make major capital improvements as part of their lease, especially at time of renewal or in granting a request for a lease extension. Yet, at the end of the lease, none of the improvements are tangible assets that an FBO operator can liquidate. They are owned by the airport, which also owns the land.

Besides some ground service equipment, a typical FBO doesn’t have much tangible collateral.  The real value bankers or investors are interested in is mostly the intangibles that help increase equity in an FBO enterprise. These include:

1. A long-term lease with extension options.
2. A favorable fuel supplier agreement.
3. Advantageous/profitable hangar contracts/agreements.
4. A sound balance sheet with consistent EBITDA performance.
5. A strong Airport Minimum Standards document.
6. A strategic business, operational and marketing plan.

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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More Positive Signs for FBO Industry Beyond Mid-Year Survey

By John L. Enticknap and Ron R. Jackson, Principals, Aviation Business Strategies Group

As a follow-up to our Mid-Year FBO Fuel Sales Survey results posted in our last blog, we are taking out our crystal ball and gazing ever so cautiously yet optimistically into the next six months with the following observations.

In reviewing the primary survey results, we found 45 percent of respondents experienced an increase in Jet A fuel sales for the first six months of 2015 compared to the same period in 2014. Add to that another 26 percent reporting flat fuel sales during this period, and you have a grand total of 71 percent of the FBOs experiencing at least the same or improved fuel sales.

At first blush, this may not seem like a big deal, especially to the uninitiated. However, for the FBOs that survived and lived through the years of decline since the big economic bubble burst of 2008, this news is music to their ears. Finally, we are starting to see a positive trend.

Gazing back into our crystal ball for a moment, we see some more positive news for the FBO industry.

First let’s look at the data released by ARGUS International, Inc., which tracks the monthly business aircraft flight activity in the United States. For five consecutive months, March through July, ARGUS found that flight activity was positive for most or all aircraft categories compared to the same periods in 2014. This activity, we feel, is a start of a healthy trend: more business aircraft hours flown, more turbine aircraft on FBO ramps, more Jet A sales.

Although the General Aviation Manufacturers Association (GAMA) is reporting an overall decline in aircraft shipments for the first six months of 2015, our experience is that flight hours have to consistently increase before manufacturers see an uptick in their order books. As flight hours increase, the demand for new or replacement aircraft also increases. Historically, the two go hand in hand. From where we sit, it is just a matter of time before this happens.

In other economic news, the Fed recently reported that although the economy is expanding slowly, there is positive news in the U.S. manufacturing sector, especially in the automobile industry. Historically, as U.S. manufacturing increases and expands, business flight hours also increase giving credence to the NBAA and GAMA initiative No Plane No Gain.

As we put our crystal ball away until our next Annual FBO Fuel Sales Survey in January, we can say that overall, we are very bullish on the FBO industry right now.

In our next blog, we take a look at some of the answers received from FBOs on our mid-year survey when asked, “What has been your biggest challenge so far in 2015?”

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.

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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.

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