The Three Elements For FBO Success in 2021

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By John Enticknap and Ron Jackson, Aviation Business Strategies Group ABSGgroup.com

As FBOs closed their books on 2020, the sound heard around the industry was a collective sigh of relief as we ended of one of the most trying years in U.S. history. As we turn the page on our calendars to a new year, it is time to take stock of where we are and where we are headed. The good news is that as more and more people receive the COVID-19 vaccinations, the closer we come to getting our lives and businesses back to normal, or at least a new normal. This may take time as some economic prognosticators are forecasting a two to three-year gradual recovery.

The challenges that lie ahead for the FBO industry in 2021 include:

  • Volatile oil prices which will affect the cost of both Jet A and Avgas
  • Higher insurance costs including liability and hangars keepers
  • Slow recovery in business aircraft flight hours
  • An equally slow recovery in airline refueling operations
  • Keeping employees healthy
  • Retaining experienced employees through at least the first half of 2021 when economic recovery is expected to kick in
  • Potentially a mandated higher hourly minimum wage
  • Higher inflation which will affect costs of goods and services
  • Pricing pressure from third-party fuel programs and providers to lower fuel cost which will effectively lower margins
  • Potentially higher corporate tax rates

Most of these challenges are beyond the control of our industry and could potentially put stress on an FBO’s bottom line. Looking forward, FBOs should concentrate on what they can control. So here are our three elements for FBO success in 2021:

1.  Watch your margins carefully and keep track of the cost basis for the fuel that you have in your tanks. In our NATA FBO Success Seminar, we encourage FBO owners and operators to strive for a $1.50 to $2 per gallon margin in order to cover the cost of doing business. This is going to be even more critical in 2021 with predicted higher fuel costs, higher insurance rates and higher costs of operations relating to wages and benefits.

2. Purchase fuel wisely. Practice a modified fuel hedging program by purchasing fuel based on favorable rates published the Thursday before delivery the following week. A good source for this information is to contact your fuel provider to get the latest fuel costs based on Platts pricing for your area.

3. Invest in a good safety program to help cut down on insurance claims and thus lower your insurance risk. At a minimum, adopt a Safety Management System (SMS) or take your safety program to a higher level and obtain an IS-BAH registration. Along with this initiative, take time to update and revamp your Standard Operating Procedures (SOPs) so that they reflect FBO industry best practices.

Lastly, FBOs who wish to apply for a second round of PPP funds should be in contact with their bank/lending institution as these funds have been approved by Congress. These funds should help bridge the gap between now and the summer months when economic recovery is expected to kick in.

Please leave any comments you have about this blog post below. If you have any questions, please give us a call or send us an email: jenticknap@bellsouth.net, 404-867-5518; ronjacksongroup@gmail.com, 972-979-6566.

ABOUT THE BLOGGERS: John Enticknap has more than 35 years of aviation fueling and FBO services industry experience and is an IS-BAH Accredited auditor. Ron Jackson is co-founder of 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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