Annual FBO Fuel Sales Survey Results & Industry Forecast:

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FBO Fuel Sales Softened in 2023

The results of ABSG's Annual FBO Fuel Sales Survey indicate that fuel sales softened in 2023 following a relatively flat 2022 performance.

With three of the five response categories underperforming from the previous year, the largest disparity was recorded by FBOs reporting a decrease in fuel sales in 2023, compared to 2022, with 41 percent indicating a reduction. By comparison, 29 percent of survey respondents reported a decline in fuel sales in 2022 vs. 2021, a differential of 12 percent.

While 34 percent of the survey respondents indicated the same fuel sales or a slight increase of up to four percent in 2023, the percentage of FBOs reporting increased fuel sales of at least five percent to more than eight percent skewed lower than the 2022 survey results. (Refer to graphs)

Remarks made by survey respondents indicated several factors that contributed to the softening in fuel sales:

  • A decrease in business aviation flight activity by Part 91 operators. Underlying contributing factors included increased inflationary pressures, the elevated cost of Jet A and higher interest/corporate borrowing rates, all of which have negatively impacted flight department budgets.

  • A continuing downturn in Part 135 flights, an aftershock effect from high demand for aircraft charter recorded during the peak of the pandemic in 2021.

  • A stalemate in the economic environment for constructing much needed aircraft hangars in order to grow a larger pool of base customers. FBOs are facing elevated construction costs and higher bank loan rates causing a slowdown in expansion of needed infrastructure. Although there is current market demand for hangar space, FBOs report that customers are vacillating over the higher cost of long-term hangar agreements which are needed to offset the increased costs associated with new hangar construction. 

 Business Aviation Flight Activity

According to Argus International in their 2023 Business Aviation Review, business aircraft flight activity in North America declined in 2023 compared to 2022. By segment, Part 91 flight activity dropped 2.6 percent, equivalent to 42,569 fewer flights, while Part 135 operations were down 8.6 percent year-over-year representing 121,551 less flights.

This data corroborates the feedback we received in the comment section of our fuel sales survey.

Confidence in the Economy

Another question we ask in our survey probes the level of confidence that FBO operators have in the current economy: ‘Is the economy headed in the right direction?’  A majority of respondents, 53 percent, said no, it’s not headed in the right direction, with 20 percent saying yes, while 27 percent were undecided (see related graph).

Top Five FBO Industry Concerns

As part of our survey, we asked respondents to provide their main concerns for their FBO and/or the FBO industry. Here are the top five mentioned:

  1. High cost of constructing new hangars: FBOs are facing elevated construction costs and higher bank loan rates causing a slowdown in expansion of needed infrastructure. Increased construction costs have been estimated to be as much as 30 percent higher from prices recorded in 2021.

  2. Effects of inflation/higher cost of doing business:
    - Higher overhead costs to include labor, goods, services, insurance, facility upkeep and utilities.
    - Airport authorities raising operating fees and more restrictive government regulatory oversight. 
    - Fear that smaller/family owned FBOs won’t be able to remain competitive.

  3. Replacing 100 LL with 100UL: FBOs are concerned about potential costs involved in switching over to unleaded Avgas to include tank farm/storage issues, fuel quality control, availability and the actual cost of the fuel. Many FBOs responding to the survey fear that the average piston aircraft owner/pilot will be priced out of aircraft ownership.

  4. Cost of GSE (ground support equipment) repair and replacement: More and more FBOs are facing higher costs to repair and/or replace GSE equipment.

  5. Finding and keeping qualified employees: This includes A&P technicians, the cost of training new employees and ongoing retention issues.

FBO Industry Forecast for 2024 and Beyond: Fuel Sales to Remain Flat

As is customary with the release of the results of our Annual Fuel Sales Survey, we put together the following forecast for the rest of 2024 and beyond.

  1. Fuels Sales for 2024. (Refer to associated graph.)

    We asked our survey respondents to forecast their fuel sales for 2024. The following is the cumulative data received:
    - Same as 2023: 41 percent
    - Increase of one to four percent: 30 percent
    - Increase of five to eight percent: 10 percent
    - Increase of more than eight percent: 5 percent
    - A decrease in fuel sales: 14 percent

  2. Adding more hangar space. (Refer to associated graph.)

    We asked our respondents if they were planning on adding more hangar space going forward. The following is their response:

    - Yes, adding T-hangars: 11 percent

    - Yes, adding box/storage hangar: 29 percent

    - Yes, adding both T-hangars and box/storage hangars: 13 percent

    - No, not adding any hangar space: 47 percent

  3. Economy/inflation.

    We expect to see a very slow decline in inflation in 2024 as the Federal Reserve tries to get nearer to their two percent goal.

  4. Interest Rates.

    Expect no cuts in interest rates until there is consistent economic data over at least two quarters for two primary price indexes: Consumer Price Index (CPI) and the Personal Consumption Expenditures (PCE) index.

  5. Price of Oil/Jet A Fuel.

    Oil prices have mostly settled between $70 and $80 per barrel for WTI causing Jet A prices to remain elevated from pre-pandemic levels. As we get closer to the November Presidential election, you may see some easing of oil prices. However, pressure from ever-changing geo/political forces and events can cause moderate to large swings in pricing for the rest of the year. As in the past, the cost of Jet A will follow the cost of a barrel of oil.

  6. Business Aircraft Flight Activity.

    Expect business aircraft flight hours to keep flattening and continue a moderating trend until inflation and the cost of crude oil are tamed.

  7. Prospects of Recession/Higher Unemployment.

    As part of the Fed’s quest to quell inflation, the effects of higher interest rates over a longer period of time will eventually cause a softening in consumer spending and economic confidence, forcing businesses to trim labor costs. The potential for a rise in the unemployment rate will make it harder for the Fed to realize a soft economic landing. At some point, there will be a new normal that will dictate the health of the FBO industry for a period of at least 12 to 15 months.

  8. Cash is King:

    FBOs should operate as if cash were king. Higher interest loans will continue to force FBOs to put off major improvements to infrastructure such as new hangars and terminal buildings. FBOs that are prepared to weather the next 12 months are those that watch their fuel margins closely. Keep steady and avoid deep discounting to attract business.

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

ABOUT THE BLOGGERS: John Enticknap 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 (ABSG) and president of The Jackson Group, a PR agency specializing in FBO marketing and customer service training.

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