Results of our Annual FBO Fuel Sales Survey are in, and we are happy to report that 75 percent of FBOs responding to the survey experienced positive — increased or the same — fuel sales in 2018 compared to 2017.
This is the third consecutive year we have seen an increase in fuel sales by more than half of FBOs responding.
By John L. Enticknap and Ron R. Jackson, Principals, Aviation Business Strategies Group (ABSG)
With the Dow Jones Industrial Average punching through the 20,000-point ceiling, a new president taking office and an economic engine that seems to be cranking out more horsepower, there is a lot of buzz going on within various U.S. business sectors, including the FBO industry, for a healthy recovery in 2017.
Recently we sent out our Annual FBO Fuel Sales Survey and early returns indicate that there is a new wave of optimism spreading across the country for a recovery in 2017. The final results of our FBO Fuel Sales Survey, as well as our FBO Industry Forecast, will be released at the NBAA Schedulers & Dispatchers Conference, Feb. 7-10, Ft. Worth, Texas. For reference, here is the link to the 2016 survey.
With all this good news coming in, here is a look at some successful business strategies we recommend for FBO owners and operators to think about in 2017.
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1. Increase Operational Productivity
a. Establish performance goals for customer service delivery,
b. Measure the productivity of your line service department and maintenance activities.
c. Increase fuel sales at point of connection.
2. Produce Better Financials
a. Fine-tune your financial dashboard and obtain information you can act on.
b. Conduct a market study to help establish better fuel margins.
c. Measure your financial returns through cash flow analysis and financial ratios.
3. Mitigate Risk
a. Create a safety-minded culture.
b. Invest in an employee training program such as NATA's Safety 1st program.
c. Develop a strong safety management system (SMS).
4. Build Long-term, Profitable Customer Relationships
a. Train all employees in good customer service practices.
b. Empower employees to resolve customer issues at the point of transaction.
c. Provide consistent service which builds customer trust.
Along with these strategies, we recommend a continuing education program for the FBO owner, operator, manager and supervisor. Author Stephen Covey, in his book The 7 Habits of Highly Effective People, talks about the habit of sharpening the saw, a metaphor for having a balanced program of self renewal.
An excellent source for continuing education and self renewal within the FBO industry is to attend the next NATA's FBO Success Seminar which will be held March 7-8 in New Orleans. These strategies and others will be discussed in more detail.
Please leave a comment on this subject 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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© 2017 ABSG
By John L. Enticknap and Ron R. Jackson, Principals, Aviation Business Strategies Group (ABSG)
Normally we stay well clear of the political arena when developing content for this blog. However, a U.S. presidential election year can sometimes create a negative effect on the economy, which can spill over into the business aircraft sector and potentially result in less FBO fuel sales.
Recently we talked to a few FBO owners and operators who participated in our Annual FBO Fuel Sales Survey and Forecast, and they indicated that fuel sales have leveled off a bit this past quarter.
We conduct our survey in January and release the results at the NBAA Schedulers & Dispatchers Conference in February. In the survey, we ask FBOs not only to indicate their fuel sales in relative terms for the completed year, but also to forecast what their fuel sales will be for the year ahead.
AdvertisementOver the past several years, the forecast has held pretty close to the actual results. The forecast from our last survey indicated that the outlook for 2016 remains optimistic with more than 90 percent of respondents predicting the same or increased fuel sales this year compared to their 2015 results. Further, 58 percent of FBOs surveyed predicted an increase in fuel sales. Of those, 40 percent expect an increase of 1 to 4 percent; the remaining 18 percent forecast an increase of at least 5 to 8 percent.
The question is: Will this trend hold up for 2016, or will FBO fuel sales results mirror what some of the largest consumer companies have been experiencing during this election year?
In a report issued this month by Bloomberg, companies such as Yum! Brands, Gap, McDonald’s, Signet and others, blamed poor sales on the election process.
Here is an excerpt from the report:
To hear retail executives tell it, the battle for the presidency between Republican Donald Trump and Democrat Hillary Clinton is causing Americans to put off buying everything from romance novels at Barnes & Noble and jeans from the Gap to burritos at Yum! Brand Inc.’s Taco Bell. They might even be delaying wedding engagements, not good news for companies like Signet Jewelers Ltd.
“The preoccupation with this election is keeping them at home, glued to their TVs and at their desktops,” said Len Riggio, the founder and chief executive officer of Barnes & Noble Inc. This election is “unprecedented in terms of the fear, anger and frustration being experienced by the public.”
The question for our industry is: Do you feel the election has put a damper on the economy resulting in less FBO fuel sales?
Please give us your answer in the space provided below.
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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© 2016 ABSG
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.
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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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:
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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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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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:
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:
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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