When Negotiating the Best Fuel Supply Agreement, Preparation Is as Important as Price

“You hit home runs not by chance but by preparation.” – Roger Maris

Your fuel supply agreement is one of the most important contracts in operating a successful FBO. Your lease with the airport authority is what puts you in business, but your fuel supply agreement is what keeps you in business.

Because your fuel supplier agreement regularly comes up for renewal, do not just go out and get a “free” dinner with a fuel supplier and sign on the dotted line! If you want to know whether or not you have a competitive agreement, you’ll need to prepare, do some research and maybe invite several suppliers to submit proposals. As Roger Maris said, preparation will help you hit that home run.

There is a lot more to a fuel supplier relationship than just purchasing fuel. You are dealing with substantial costs that affect operating expenses and have an impact on your:

• Cash flow
• Balance sheet
• And, most of all, the profitability of your business

Yes, profit is great. That’s why you are in business. Don’t forget your fuel supplier is in business to make a profit too. You need balance in your agreement to ensure a winning contract for both parties.

In our NATA FBO Success Seminars, we teach a course about negotiating a favorable fuel supplier agreement. In this course, we also discuss how and when to buy aviation fuel. Here is an overview of some of the elements to address in a fuel supply agreement.

Be Prepared with Platts Oil Price Data

First, of course: What is the fuel going to cost? In order to answer this question we need to understand how world fuel markets work.

No doubt you hear all the time on the news what the price of crude oil is doing. As you know, it has been all over the place but mostly up, up, up — with an occasional downward correction. The price of crude drives jet fuel prices, but it is also affected by supply and demand, speculators, inventory, etc. So how do all the world buyers keep track?

The Platts Oilgram Price Report published daily by McGraw-Hill includes the Platts Jet Fuel Index. The fuel price indices are published worldwide with nine regional segments in the United States alone. There are also indices for Europe, Middle East and the Far East.

For general aviation, each week, the daily U.S. Jet A index prices are averaged. The change in the average price for the week generally is posted on a Tuesday, and your Jet A fuel price changes are calculated by the change in the average change for the week. You may purchase a  subscription to this information from McGraw-Hill. (It is expensive.) A free source of Jet A pricing information and changes is the IATA web site, which maintains the Jet Fuel Price Monitor and Fuel Price Analysis.

Making the Numbers Work

Because jet fuel is priced based upon a Platts index, ask your potential supplier to quote a fuel price based upon a nearby index. For example, we can choose the Gulf Coast, New York, Los Angeles or another available index.

Given that the fuel supplier needs to make some money, it will quote a price based upon a Platts index, plus a differential (the supplier’s profit margin). Ask several suppliers to quote a price based on the same Platts fuel price index for a specific date, plus a differential. Now you can measure each quote on an apples-to-apples basis.

Say your business is doing $5 million per year in fuel sales, and you are paying anywhere from $125,000 to $185,000 per year in credit card fees that can range up to 4 percent or higher. How would you like to save $10,000, $20,000 or even $30,000 per year on these credit card expenses?

Believe it or not, you can realize this kind of savings when you negotiate your new fuel supplier agreement. Yes, you may negotiate the best arrangement for credit card fees paid vs. payment terms. We like to call this free money! This savings goes right down to your profit line.

In addition, did you know that until recently, you were paying on average $0.41 per transaction for each debit card transaction? This fee just dropped to $0.21 in July!

When you ask various suppliers for a fuel proposal, credit card fees and payment of due amounts are part of the competitive nature of your agreement. By getting better rates on your credit cards and educating your employees on the best card to use, you can save substantial money for this expense. Again, free money!

Creating Cash Flow

When you have to purchase a load of jet fuel, you either need to have cash in hand or, in short order, the cash to pay for the load. That’s $25,000 or more.

If you have collected your accounts receivable and reconciled your credit card payments, then you’re in pretty good shape. However, if it happens to be Friday, the payroll is due, and your insurance payment is due, then, all of sudden, you’re short on cash.  

As part of your fuel supply agreement, you need to negotiate favorable credit terms. Of course you need to provide financial statements to support a credit line, which is no different than when you apply for credit from your local bank.

These are just a few of the terms that affect your profitability. You should also prepare to negotiate these other components that are part of a comprehensive fuel supply agreement:

• Marketing support
• Equipment leasing and maintenance
• Incentives to make a change in suppliers
• Pricing for 100LL fuel
• Transportation fees
• Contract fuel and other issues vital to your success

All these issues affect the cost and benefit to you and your fuel supplier. As the FBO owner, you should evaluate proposals from various suppliers to get the best agreement. Remember Roger Maris. Preparation is the name of the game when working toward a balanced fuel supply agreement.

If you would like more information or assistance in developing a favorable fuel supplier agreement, please let me know. In addition, the National Air Transportation Association (NATA) is a great resource. We will be covering this subject in detail at the next NATA FBO Success Seminar: Fuel Summit 2011, Nov. 8-10, Atlanta.

We would like to hear from you. Give us your comments. You can call me at 404-867-5518, email me at jenticknap@bellsouth.net, or go to our web site for more information: www.absggroup.com.

John Enticknap

John Enticknap founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including as president of Mercury Air Centers. He is the author of 10 Steps to Building a Profitable FBO and developed NATA’s acclaimed FBO Success Seminar Series.

Lessons of $1 Hot Dogs Help FBOs Cut the Mustard

Frankly Speaking, FBO Customers Must Relish Their Surroundings, Be Happy and Perceive Fair Value

As a red-blooded American, I love hot dogs, apple pie and baseball. Being from the Dallas area, I’ve been following the Texas Rangers through thick and thin for more than 20 years. Mostly it has been thin, though the Rangers made it all the way to the World Series last year for the first time in franchise history.

When the newspaper hits my driveway at 6 a.m., I read the sports section from stem to stern and go over the box scores and team stats.

Recently, I read a sidebar article about Dollar Hot Dog Night at the Rangers’ stadium. On Wednesdays when the Rangers are in town, they cook some 65,000 hot dogs for hungry patrons. At a buck each, the promotion attracts a lot of families to the game, and the conies are quickly snatched up!

The Art of the Deal

I’m sure you have your favorite sport, and if it’s baseball, you know how a hot dog with your favorite beverage tastes on a warm summer night around the diamond. It hits the spot! But something else is going on at the ballpark.

In the article, the writer asks a university professor for his opinion on why a $1 hot dog attracts so many to a game when patrons can have all the hot dogs they want for a lot less money by buying them at a supermarket and eating them at home.

His answer, posted in the Dallas Morning News, is what spurred me into writing this blog post.

According to Ernan Haruvy, a management professor at the University of Texas at Dallas, a perceived deal, such as the $1 hot dog, depends on several factors, including:

1. Your physical surroundings
2. The customer’s mood
3. What the customer believes is a fair value for the transaction

OK, that all sounds logical because the customer is at the ballpark; therefore, the surroundings are fun. Secondly, because a day watching baseball is better than a day at work, the customer is probably in a pretty good mood. And lastly, $1 for a dog that usually costs $4 seems like a relatively fair value.

But what does this have to do with an FBO?

Play Ball!

In previous blog posts, Are You the Restaurant Owner; Do You Feel Lucky; and Don’t Forget the Cheese, we discuss what is important to customers when they choose a particular FBO.

First of all, the physical surroundings need to be pleasant enough that they don’t cause a distraction. The ramp and equipment need to be neat and tidy. Line-service personnel should use crisp ushering techniques to guide the aircraft. The facilities, particularly the bathrooms, need to be as clean and sparkling as possible.

Next, from the time the customer comes onto the ramp to the time for departure, it’s everyone’s job to create an atmosphere that keeps the customer in a good mood throughout the transaction. Customers who fly on private and business aircraft are used to getting good service wherever they go.

And finally, when the customer goes to pay the ticket, it’s important that he or she truly believes it represents a fair value. Remember, just because you may have offered a volume fuel discount doesn’t mean the customer flies away feeling like he or she received a fair value.  

For the type of customer that you want to attract and keep, receiving a fair fuel price is just part of the equation. If you failed to deliver an exceptional customer service experience, chances are your facility will not be remembered, and you will not get a recommendation.

So the next time you bite into a red hot coney, remember these three simple principles of pleasing a customer:

1. Maintain good physical surroundings.
2. Keep the customer in a good mood.
3. Give the customer a fair value.

If you have had success in pleasing a customer, please let me know the particulars by emailing me at Ron@TheJacksonGroup.biz.

Ron Jackson

Ron Jackson is co-founder of ABSG and president of The Jackson Group, a public relations agency specializing in aviation and FBO marketing. He has held management positions with Cessna Aircraft and Bozell Advertising and is the author of Mission Marketing: Creating Brand Value and co-author of Don’t Forget the Cheese!, the Ultimate FBO Customer Service Experience.

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Aviation Business Strategies Group principals and NATA FBO Success Seminar leaders John Enticknap and Ron Jackson blog about hot button issues such as fuel prices and managing relationships with municipalities as well as day-to-day concerns of running a business such as customer service and marketing. We will deliver all the recent blog posts directly to your email inbox.

Municipalities Competing with Private FBOs: Fair or Foul?

As many of you are aware, over the past couple of years there has been an effort by a number of municipal airport managements in the United States interested in entering the aviation services business where private enterprise providers already exist.

It’s a political hot potato to be sure. No one is suggesting that municipal airport-managed FBOs should not exist. There have always been airport-managed FBOs providing essential services at small and large airports, and for good reasons.

The controversy arises when a municipal airport authority decides to either compete with or edge out an existing private FBO enterprise. This begs the question: Is it fair, or is it foul? To answer this question, let’s examine both sides of the issue.

The Case for Municipally Run FBOs

Here are some background statistics from the 2011 NATA general aviation fact book:

• Total number of civil private-use airports: 14,353
• Total number of civil public-use airports: 5175
• Civil public use Part 139 airports: 551
• Civil public use non-Part 139 airports: 4624
• Total number of FBOs in the United States: 2987
• Approximate number of FBOs within chain operators: 250

As we can see by the above statistics, there is a very large number of airports and a relatively low number of FBOs. Without going into details, for airports with low traffic figures that cannot support a profit-oriented FBO, municipal airport management can provide essential services — fueling, terminal operations, tie downs and hangars. Our general aviation industry would not operate efficiently if these services were not available.

The statistics above also show that the FBO business continues to be fragmented, and major consolidation will continue to occur. Add to this the fact that only about 8 percent of the FBOs in this country are part of a network or chain. In addition, the vast majority of the 14,353 civil private airports are unable to support an FBO. At these airports, the operator of the airport must provide the essential services.

The Thin Gray Line

In some recent incidents, some municipal airport authorities are muddying the waters by threatening free enterprises. With reduced budgets and reduced business, they are now looking at getting into the business of offering private aviation services as a way to increase income and defray operating costs.

What is most troubling is that at some airports, the management is trying to displace existing private businesses.

Here are some scenarios that seem to be playing out:

• Existing privately held FBO’s lease comes to end. Airport authority takes over FBO operations.
• Municipal airport managements builds FBO with federal funds to compete against existing privately owned FBO.
• Existing FBO’s long-term lease is coming to end. Airport wants to build new FBO with federal funds to displace FBO. Considers federal funds “free” money.

Obvious questions arise. Should a government entity be allowed to enter an existing free market and compete against an existing private sector FBO? Should a municipal airport authority be allowed to eliminate private enterprise under circumstances listed above and become the sole source of providing a product or service where a private enterprise is available and can more than qualify?

So What Are We to Do?

There are no easy answers. Sometimes when government takes over there is not much you can do. The government has sovereign immunity, and many attorneys will tell you that you do not have a realistic chance to win a lawsuit. In the majority of cases, litigation ends up being a costly waste of time.

Yes, you can do plenty to protect your business. But sustaining your FBO with a satisfactory long-term lease is not necessarily a purely business proposition. Rather, it requires an effort to pull together your political, business and legal skills.

First and foremost, you must participate in your airport and business community. That means being a part of and taking part in the airport management processes no matter what kind of management structure the airport operates under, whether run by the city, airport authority or county municipality. You, as a tenant on the field, should be attending all public airport meetings, get to know the manager and board members, be part of the local business community and be involved in supporting local civic organizations.

These activities will give you information! You can get to know the thinking of the airport personnel, know the finances of the airport and know the political movers and shakers. By having knowledge of the local political and business community, you can get a sense of what you need to do to extend your lease.

Further, you should have an idea of the temperament of the airport authority. You should have a sense for whether it will negotiate a new lease, whether the airport is willing to have a Request for Proposals (RFP) process and what the “hot buttons” or issues are for the airport.

Get Help!

• You might want to engage your attorney, who is no doubt a major part of the local business and political community. Engage some experienced consultants in the industries who have dealt with these complex issues before.
• Contact NATA. This organization is very involved in this issue. It has already engaged government officials on several levels to support private FBO businesses.
• Contact your senators and congressperson to support the Freedom from Government Competition Act, H.R. 1474/S.785. This bill removes the unfair advantage government has by subjecting commercial activities performed by government entities to market competition to benefit the taxpayer.

We have to be actively involved in our businesses and not only on the day-to-day operational issues. You must also be involved in the local business and political community. These are not easy issues to deal with. Remember, airports are businesses also. They are always seeking more traffic count and federal funding and dealing with many environmental and political issues themselves. Be part of the solution for their issues.

Remember, don’t be the FBO owner who wonders what happened. Be the owner that makes things happen!

What do what you think of this issue, or what you have done to protect your FBO as a going concern? Let us know in the comments, and email me at jenticknap@bellsouth.net.

FBO Success Seminar Registration

The next NATA FBO Success Seminar is scheduled for Nov. 8-10 in Atlanta. Register at nata.aero.

John Enticknap

John Enticknap founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including as president of Mercury Air Centers. He is the author of 10 Steps to Building a Profitable FBO and developed NATA’s acclaimed FBO Success Seminar Series.

Reeling in Customers: Either Fish, or Cut Bait

I have returned from a much needed vacation to the Canadian outback where I enjoyed a week of fishing with no phone, TV or newspaper.

Every year, I travel to the far western reaches of Ontario for our annual fish camp outing that has been a part of my family tradition since 1961, when my father first went with his buddies to the same waters we fish today. I started going with my dad in 1984, and now his 16-year-old great-grandson, my grand nephew, is representing the fourth generation to wet a line in these great Northern waters.

On this most recent outing, I started to think about writing a blog post based on the similarities between fishing for dinner and casting a net for new FBO customers.

Planning the Trip

As many times as I have gone on this fishing trip, there is still a fair amount of planning to do. Same goes for developing a sound marketing plan to increase your FBO business.

Blogger Ron Jackson and 16-year-old grand nephew Chas holding a 20-inch Walleye on a Canadian fishing trip.As author Stephen Covey says in his book The Seven Habits of Highly Effective People, you have to begin with the end in mind. Because I’ve been on this trip before and have had success in hauling in some nice fish, I can visualize my goal: A 29-inch, 10-pound Walleye!

Same goes for the FBO business. You know the type of valued customer you want to attract, so you should visualize reaching your goal, whether it’s five more new customers or 50. And you should be updating these goals annually.

Research shows that a business can lose up to 30 percent of its customer base annually due to attrition or churn in the marketplace. Factors include companies downsizing and selling their aircraft; companies going out of business; mergers and acquisitions; new flight destinations; and the worst case scenario, defection — losing a valued customer to a competing FBO.

New customers are paramount to keeping a healthy balance sheet.

Fish or Cut Bait

You have set your goals, you have written your business and marketing plan, and you have followed your map to your destination. Now you have to ask yourself, “Are you going to fish or cut bait?”

Sometimes we can take planning and strategizing too far. We can call too many meetings and second-guess our way to being highly ineffective. As one of my bosses at a Fortune 500 company years ago said, “If you don’t get started, you’ll never finish.”

And so it is with catching fish or a new customer. If you don’t get your pole in the water, nothing will happen.

Years ago, I read a book titled Bunkhouse Logic by Ben Stein. The premise was about the same. You can’t win at anything unless you first get started. You’ve got to start the cattle drive and you’ve got to finish the cattle drive, point A to point B. Also, if you want to win at poker, you first have to get yourself to the table. In other words, you have to get your feet wet and sometimes force yourself to get started.

Using the Right Bait

Catching a good customer on your terms is a far better scenario than catching a customer on his or her terms. Remember the blog I wrote titled Building Long-Term Profitable Customer Relationships, Part 2: Do You Feel Lucky?

In this post, we discussed the danger of attracting the wrong customer by subjectively lowering the price of fuel. Remember, you have to use the right bait in attracting the right profitable customers if you want to keep them for the long-term.

You have to give them a reason for choosing your FBO by providing them with a sense of delivering a real customer value proposition (CVP). For instance, done properly, the CVP can be the right combination of clean and attractive facilities, fair fuel prices and a knock your socks off customer service experience.

Now that is baiting your hook with something more than corn from a can. 

Keeping Your Fish Healthy and Happy

When a person goes to a fish camp in Canada, he is there for primarily one reason: catching fish. So the fisherman is up at the crack of dawn and fishes all morning and then from late afternoon until sunset, which is usually after 9:30 p.m. this far North.

Therefore, having a live well in the boat is a great asset so the fish stay fresh.

So it is with attracting new customers to your facility and keeping them. You have to figure out a way to keep them happy and satisfied while they are in your facility.

In my post Building Long-term Customer Relationships, Part 3: Don’t Forget the Cheese! I talk about delivering a memorable customer service experience that will keep your customers coming back for more. Here is a recap:

The use of Cheese in our proprietary customer service training course serves as a key reminder to CSRs, as well as other employees, to practice exceptional customer service. A few fundamentals of great customer service are:

• Smile. Remember to say, “Cheese,” to yourself, as if someone were taking your photo. Even when answering the phone, put on a smile, and the customer on the other end will sense they are talking to a happy person.
• Add a little extra when delivering customer service. Cheese represents the added touch, the little extra that puts a smile on the customer’s face and makes them keep coming back.
• Remember a customer’s name. In the FBO environment, adding cheese can be as simple as remembering a customer’s name. Most people react positively to being called by their name and are impressed when you remember. Are you the restaurant owner?
• Go the extra mile. Going the extra mile could be something as simple as showing the customer where the pilot lounge is located instead of pointing in the general direction.

If you’ve had success in casting your net for customers, I’d like to hear from you. Please email me at Ron@thejacksongroup.biz.

Ron Jackson

Ron Jackson is co-founder of ABSG and president of The Jackson Group, a public relations agency specializing in aviation and FBO marketing. He has held management positions with Cessna Aircraft and Bozell Advertising and is the author of Mission Marketing: Creating Brand Value and co-author of Don’t Forget the Cheese!, the Ultimate FBO Customer Service Experience.

When Pricing Fuel, Use Numbers to Your Advantage

“You can't do today's job with yesterday's methods and be in business tomorrow.” – Anonymous

We know the pricing game all too well. Gas stations and auto dealerships have conditioned us to react to pricing of a product or service by offering a perception of a good deal.

In the FBO fuel pricing arena, we tend to play the same game.

In a previous blog post, FBO Fuel Pricing: Seeking a Silver Bullet, we discussed some pricing theory and came up with some ideas to find the silver bullet — which is the best price.

In the FBO business today, some customers call ahead for fuel prices, seek to use contract fuel suppliers and try to negotiate when they arrive on your ramp. We would like our customers to believe that our prices are well thought out and not just some arbitrary posted numbers.

Knowing how customers interpret numbers can help your FBO make stronger pricing decisions. What we would like to discuss here are some thoughts that go through people’s minds when they are looking to purchase. Consider these ideas drawn from “The Importance of Numbers,” written by Geoff Williams and published in Go magazine:

Make Your Prices Easy to Remember

If you make your prices easier to remember, comparison shoppers should think of your FBO more readily. Your potential to complete a sale increases.

The numbers 0 and 5 are remembered easily. For example, $4.70 for a gallon of fuel is easier to remember than $4.72, and $5.50 sticks better than $5.58.

Precise Numbers Feel Firm

Precise numbers seem less flexible to consumers than rounded numbers, according to a study by a social psychologist named Matt Wallaert. If you price your fuel at $6.00 per gallon, your price might seem flexible. If your price is $6.23, it appears to be non-negotiable.

Minds Play Tricks

Our minds play tricks, according to DePaul University professor and pricing expert Tim Smith. Auto gasoline priced at $3.699 is really $3.70 a gallon. In the Western world, our languages read left to right, so to some extent, we encode the lower numbers on the left first. In addition, we seek the best deal from a rational point of view, but we perceive emotionally that we have “saved” by not paying $3.70 a gallon.

We tend to have a mindset when it comes to prices. It is incumbent on us to break out of normal thought patterns and be original with our pricing proposals to pilots. If you know how people view numbers, you can predict their reaction to prices and, therefore, price more strategically. For example, above a certain threshold — say $5.00 per gallon — people will not react too differently to $5.25 or even $5.45 a gallon. They will not balk until you approach the next threshold, $6.00 per gallon. For maintenance services, on a higher price scale, $875 is better than $900, yet $825 will sell as well as $800.

Blogger John Enticknap presents at the 2011 Florida Aviation Trades Association (FATA) annual conference.Much can be said about numbers and their importance to your pricing theory as well as your target margin — both gross and net. By keeping in mind some of the psychological factors discussed above, you have a better chance of making the sale.

As our anonymous quote states, we must keep an open mind and study new business ideas and methods to be successful. Yes, we see many of the same business situations time and again in the FBO business, but that should not allow us to get complacent or not try new thinking.

Stay flexible, and stay informed.

Please let me know what you think, and share your ideas. Please email me at jenticknap@bellsouth.net.

FBO Success Seminar Registration

The next NATA FBO Success Seminar is scheduled for Nov. 8-10 in Atlanta. Register at nata.aero.

John Enticknap

John Enticknap founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including as president of Mercury Air Centers. He is the author of 10 Steps to Building a Profitable FBO and developed NATA’s acclaimed FBO Success Seminar Series.

Coaching Provides Valuable Seasoned Advice

At some point in our lives, we all need a little coaching to get through the task ahead of us.

I remember when my dad took the training wheels off my bike and encouraged me to keep the handlebars straight as he ran alongside on my first solo ride.

High school football and baseball coaches shaped the way I performed on the field and taught me valuable lessons about life along the way.

As a student pilot, my instructor coached me through turns and stalls and built up my confidence for the eventual solo flight.

After a couple of decades of developing marketing plans for companies such as Cessna and Fairchild Aircraft, I had the opportunity in the year 2000 to create a public relations campaign for the grand opening of a Mercury Air Center location in Burbank, Calif. My client was John Enticknap, who served as president of the 21-location FBO chain. 

I didn’t have a lot of experience in the FBO business back then, but under John’s tutelage, I’ve been spending the last 11 years soaking up his vast knowledge of the FBO business.

When John and I discussed starting an FBO consulting business together, I knew I had a partner that had a lot to offer the FBO community. So in 2006, John laid the groundwork for Aviation Business Strategies Group by outlining his vision for the fledgling company.

Vision of Helping FBOs

He told me he wanted to start a business that would help aviation service companies, FBOs in particular, become more profitable. His vision was to provide an affordable resource to the FBO industry through sharing, teaching and coaching.

As a basis for the new business, I suggested we put together a list of initiatives that would help FBOs run their businesses better and ultimately become more profitable.  There were several marketing projects that John and I worked on together for the Mercury Air Center chain that would make great white papers and teaching strategies.

The result was what we called 10 Steps to FBO Success. It was way more than “FBO Business 101.” It was the essence of years of real-life experience seeking solutions to problems that arise from operating an FBO.

One problem we attacked was the high cost of FBO insurance. After the Sept. 11, 2001, tragedy, insurance companies began dramatically raising FBOs’ premiums. Mercury’s insurance premiums for the 21 FBO locations were escalating exponentially.

We decided to create a strategy for lowering the insurance premiums by developing a better insurance story for the insurance brokers to evaluate. (This is one of the 10 Steps to FBO Success and a subject of one of the sessions we teach at the NATA-sponsored FBO Success Seminar.)

Under John’s coaching, I absorbed what insurance underwriters were looking for in terms of safety and security of all FBO operations. We took this information and built a comprehensive safety audit program. Part of this initiative raised awareness among FBO employees for the need for two wing walkers, especially for aircraft movements inside hangars.

We created some large banners and posters for display in the hangars and then conducted safety classes for employees on a regular basis. One of the banners exclaimed, “Don’t Get into a Tow Jam!” and a supporting poster listed all the steps to safely tow an aircraft.

As a result of this industry coaching initiative, hangar rash went way down, the level of safety went way up, and customers actually liked seeing the banners and posters as a reminder of how carefully the FBOs were treating their aircraft. And, by the way, insurance premiums started to come down.

The business coaching John gave me helped me in understanding what I needed to do to get my job done. It also helped FBO employees improve and FBO owners control insurance costs.

Who Can Benefit from Business Coaching?

Over the past several years, business coaching has come to mean a lot of different things. What I’m talking about is not a personal life coach, which is different from what a savvy business coach can offer an FBO.

FBO owners, operators and managers can benefit from a little or a lot of FBO business coaching. The best candidates for such coaching services are:

• Those seeking to improve FBO business performance and earn a better return on their capital investment.
• Those who are committed to improving the FBO operations and are thus unsatisfied with the status quo.

Working with a coach is normal for many. Musicians, tennis players and golfers, to name a few, work regularly with coaches to improve their performances. In the mainstream population, hiring a personal trainer is not uncommon.

Business coaching can be found through various channels. Find a mentor in your business you can bounce ideas off of, attend seminars and workshops, or even hire a professional coach. The goal is to improve the way we manage and to seek solutions to problems that plague the efficiency of an FBO operation.

Learning Opportunities

If you are interested in some seminars specifically for FBO owners, operators and managers, here are some opportunities:

Florida Aviation Trades Association Annual Meeting

On June 14, John will be a guest speaker at the annual convention for the Florida Aviation Trades Association (FATA) in Sarasota, Fla. Working pro bono, John will be teaching two sessions:

• Session 1: Risk Management & Claims Avoidance Through Better Operating Practices
• Session 2: Developing Your Own Third-Party Fuel Pricing Strategy

FBO Success Seminar

Those seminars are also part of the three-day FBO Success Seminar we will be teaching Nov. 8-10 in Atlanta during the NATA’s first FBO Fuel Summit. 

If you can attend either or both of these seminars, I would encourage doing so. These are opportunities to get some good advice from a seasoned professional.

If you would like to share a teaching or coaching story, please email me at Ron@thejacksongroup.biz.

Ron Jackson

Ron Jackson is co-founder of ABSG and president of The Jackson Group, a public relations agency specializing in aviation and FBO marketing. He has held management positions with Cessna Aircraft and Bozell Advertising and is the author of Mission Marketing: Creating Brand Value and co-author of Don’t Forget the Cheese!, the Ultimate FBO Customer Service Experience.

Deliver Great Customer Service by Practicing Your Craft

“Maybe because I've hit a million balls? … And maybe because I'm dedicated and want it more.” – Vijay Singh, professional golfer ranked No. 1 in the world, 2004-05

Recently, I was reading a newspaper article about the practice habits of professional golfer Vijay Singh, and I thought this would be a good basis for a blog post on delivering the ultimate FBO customer service experience. Perhaps this seems a little disjointed, so allow me to explain.

Whether you follow golf or any other sport, I’m sure you’ve run across articles and have heard TV announcers remark about the successes and failures of professional athletes. Frankly, I like to learn about the elements of success, rather than the failures, so when I read this article on Singh, it reminded me of his breakout year in 2004.

As you may recall, Tiger Woods had vaulted to the top of the world ranking and looked invincible. Then came Singh, playing like a man possessed, and he eventually replaced Woods as the No. 1 ranked golfer in the world, at least for a period of time. He openly admitted that his goal was to become the No. 1 golfer in the world, thus replacing Woods, and he knew it would take long hours of practice.

Even Madison Avenue took notice that year. Singh appeared in a TV commercial where he was shown practicing putting on a frozen lake in Alaska while native Eskimos looked on in bewilderment.

And what was the message the commercial was trying to drive home? What made Singh so successful?

Dedication to Practice

The answer, of course, is being good at what you do by practicing your craft. In Singh’s case, it wasn’t just an hour here and an hour there but a wholesale dedication to improving his game through countless hours of practicing, practicing and still more practicing.

Everyone in the golf world was talking about it. Other players took notice, and his work ethic became legendary. As the old joke says, if you looked up the word practice in the dictionary, there would be a picture of Vijay Singh.

As part of our NATA-sponsored FBO Success Seminar, we teach a course on delivering the ultimate customer service experience. Called ”Don’t Forget the Cheese!” we use what we call Cheese Bites to help illustrate various good customer service habits.

One of these Cheese Bites is Practice Your Craft. Like an actor who must perform well on a stage, customer service staff are also on stage every time they put on their uniform and enter the FBO terminal  arena or greet an aircraft on the ramp.

The whole process of delivering a great customer service experience needs to be a well-orchestrated performance, practiced over and over to ensure the safety of not only the customers, but the FBO staff as well.

What Pilots Want from an FBO

At Aviation Business Strategies Group, we’ve conducted many FBO surveys to find out what pilots and dispatchers want most from an FBO. What pilots say is they know whether or not an FBO will deliver a good customer service experience the moment they pull off the taxiway and onto the ramp. If the line service personnel are not on the ball and looking sharp, they know the rest of the turn will be disappointing.

It’s called a first impression, and if an FBO is not practicing the art of delivering a good first impression, the rest of the customer service deliverable is lost!

It all starts with the way the line service crew ushers in an aircraft. Here’s where practice comes to bear. First comes a firm grasp of the wands, followed by crisp movements of the arms and a precise motion signaling the pilot to stop the aircraft at a designated spot on the ramp.

Then, the rest of the crew springs into action by carefully placing orange safety cones according to the SOP manual. Once the passengers disembark, the baggage is swiftly unloaded and placed into the waiting limo, which is then safely escorted off the premises.          

At the proper moment, the lead line service person (or CSR, depending on how you’re organized), approaches the pilot in command and reads back the order information previously sent to the FBO by either a phone message, fax or email. What pilots don’t want to hear is: “Howdy, how can I help ya?” Especially if they took the time to send in an order for service ahead of time.

Remember, You’re On Stage

While at the driving range with with another golfer who had grown frustrated with practicing, Singh admonished the other golfer. “That's your problem,” Singh said. “You won't work at your game enough to be as good as you could be.”

No matter if you are a professional athlete, a line service technician or a customer service representative, practicing your craft is an important element to having a successful career. Remember, when you put on your uniform and hit the deck, you’re on stage, and every customer is watching how you, and your FBO, perform.

If you have any tips or stories to pass along on delivering a great customer service experience, please email me at Ron@thejacksongroup.biz.

Ron Jackson

Ron Jackson is co-founder of ABSG and president of The Jackson Group, a public relations agency specializing in aviation and FBO marketing. He has held management positions with Cessna Aircraft and Bozell Advertising and is the author of Mission Marketing: Creating Brand Value and co-author of Don’t Forget the Cheese!, the Ultimate FBO Customer Service Experience.

The Cost of Aviation Fuel, Part 2

FBOs Might Need a Two-Pronged Pricing Strategy

"Everybody has accepted by now that change is unavoidable. But that still implies that change is like death and taxes — it should be postponed as long as possible and no change would be vastly preferable. But in a period of upheaval, such as the one we are living in, change is the norm." – Peter Drucker, Management Challenges for the 21st Century (1999)

Recently, I was reading an article posted to Eye on the Economy on msnbc.com. The article was titled “As oil prices drop, Fed should get credit.” After reading the article, I decided to write Part 2 to a previous blog post titled The Cost of Aviation Fuel.

In the first post, I talked about continued increases in the cost of aviation fuel and what FBOs can do to mitigate high retail prices. We looked at a number of the reasons for the increasing cost of fuel:

• The Fed policy of a weak dollar — a weak dollar requires more dollars to buy a barrel of crude oil.
• The continued unrest in the Middle East.
• Uncertainty with the federal deficit.
• Speculators betting on the increased price of fuel.
• Lack of offshore drilling in the United States.

Since then, here is what is happening in the world markets:

1. The dollar’s value is up 3 percent so far this month after sliding 15 percent against other currencies over the past year.
2. Global growth seems to be slowing.
3. The inflation threat from easy money policies may be easing.
4. Oil stocks have remained high even with the unrest in the Middle East.
5. Inflation fears in Europe have prompted European central banks to raise interest rates.
6. China has required its banks to hold larger cash reserves to help curb inflation.

The Platts fuel index prices peaked two weeks ago. The Gulf Coast Pipeline mean was $3.3239 per gallon. Looks like the West Coast took the prize for the highest Platts prices at $3.4275.

So what happened in the last two weeks? Prices dropped more than 15 cents last week (May 10). This week, we have seen nearly an additional 8 cent drop (May 16). We now have a drop of 23 cents!  Perhaps your customers are wondering why you haven’t dropped your price.

I’ve seen posted retail prices of Jet A as high as $8.74 per gallon. Who is going to pay that for jet fuel?

And what’s going on with oil futures? The trend right now is good, but will it last? There are many factors in the national and world marketplace that can affect what is happening.

On a national basis, we have the debt ceiling vote coming within two weeks or so; the economy might continue to slow; demand might be down; the Middle East could get more unstable. All these issues can negatively affect the markets and drive up prices again.

It appears the oil commodities markets/speculators are backing off the high prices to be paid for futures.

Simply put, the forces that drove the market up are now down.

All this begs several questions:

• Will the fuel prices continue to drop?
• How do I react and price my fuel?
• The customers want better prices now! How do I help them while trying to keep my business profitable?

What Can You Do?

First, do not change your price! You have all that high priced fuel in storage — the same goes for the terminals and pipelines. This high-priced inventory will take a few weeks to work itself through the system. So when you purchase you next load of fuel, you will then be able to purchase at the lower price. How fast you turn over your fuel will determine how and when you pass along price reductions to your customers.

In a previous blog post, we talked about FBO Fuel Pricing: Seeking a Silver Bullet, so we won’t plow that ground twice. Suffice it to say you must maintain your margin to sustain your profitability and understand pricing theory. But the high price of fuel is making the customers very price sensitive. Change is coming!

Dual Pricing Strategy

One possible scenario is to establish a dual pricing strategy by providing an a la carte service as well as a full-service offering.

Remember when gas stations offered two levels of service, self service and full service? You would pay extra if you wanted everything under the hood plus your wipers and tire pressure checked. Otherwise, you saved by doing it yourself.

An FBO could offer two levels of service as well. For instance, you could offer full service for one price, whether retail or contract fuel. Under this pricing scenario, you continue to offer all your usual amenities for one set full-service price.

Then you could offer a discounted or a la carte “basic” service price. If the operator wanted other services, he could pay for ice, coffee, papers, lounge, transportation, baggage handling, galley and lav servicing, etc.

Our advice is to stay in touch with your fuel suppliers and what is happening in the national and world marketplace. Change will continue to happen, and you must be aware of it and react in a reasonable businesslike manner to be successful. Think seriously about an a la carte or full-service pricing methodology.

FBO Success Seminar Registration

The next NATA FBO Success Seminar is scheduled for Nov. 8-10 in Atlanta. Register at nata.aero.

John Enticknap

John Enticknap founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including as president of Mercury Air Centers. He is the author of 10 Steps to Building a Profitable FBO and developed NATA’s acclaimed FBO Success Seminar Series.

FBO Marketing, Part 2: Affordable Promotions

As any FBO owner or operator knows, attracting new customers and keeping current customers is the lifeblood of your business.

In previous blog posts, we have discussed the aspects of keeping current customers by providing an exceptional customer service experience: Be the restaurant owner, and don’t forget the cheese!

In this multipart series, we talk about attracting new customers with little or no cost. In Part 1, Low- or No-Cost Promotions, we discussed the basics of promoting your FBO on a limited budget. In this post, we’ll talk about public and media relations as an affordable promotion that will help extend your brand reach even further.

Public and Media Relations

Writing and distributing a news release is a cost-effective communications tool. However, there are some basic guidelines that FBOs need to follow in order to ensure their announcements make their way to the selected media.

1. Ask yourself if the news is newsworthy.

Many companies, including FBOs, will send a news release out on everything that happens at their place of business. Trouble is, most of it is not newsworthy and, therefore, gets ignored. If you do too many of these, there is a chance that when you have something that is truly newsworthy, it may get passed over because of your past history. 

Editors and writers keep very busy, so only offer announcements that are at least potentially newsworthy. Here are a few ideas that most editors find of interest:

• New facilities or expansion of current facilities
• Any significant renovations
• Acquisitions of other facilities on your airport or other FBOs
• Key personnel changes to your organizations

Here are some things editors would rather not see:

• Announcements about a new web site
• Releases that are not timely or current
• News that is completely off target and irrelevant to the industry

2. Be clear and concise.

In journalism school, you learn to write in an "inverted pyramid" style. In other words, say what is most important in the first sentence or paragraph.

• Then support the main information with other facts and figures. Think of the five “Ws”: Who, what, where, when and why?
• Include a relevant quote by a key manager or employee
• Follow up with what we call a “boilerplate” that is a concise overview of your company information, the services you provide and your contact information.
• Keep the information as short as possible, and don’t use flowery language.

3. Include a photo if possible.

• Use a fairly good camera. Make sure the photos are in focus and of high resolution. Most publications request a resolution of 300 dpi.
• Frame your photo so you are not too far from your subject.
• Watch out for background clutter. This is particularly important when you shoot a photo of an employee for what we call a ‘head shot’. I’ve seen photos taken against a wall with a clock in the background, pictures, bright colored paintings and even model aircraft that look like the airplane is flying right out of the person’s head.

4. Timely and relevant: Think outside the box!

Earlier, we talked about being timely and relevant with your information. A couple of years ago, I worked with one of my clients on a short news release relating to the popular green movement. They had just replaced all their gas powered ramp courtesy carts/golf carts with state-of-the art electric carts. They also invested in a new ramp sweeper to pick up FOD.

For this announcement, I took a photo of their new cars along with the ramp sweeper, and framed it with an aircraft in the background to add relevance to the aviation market. I also used their distinctive terminal building with company logo as a backdrop. As they say, a photo is worth a thousand words.

Then I issued the photo with a photo caption only, not as a long news release. Of course I included details about “going green” on the ramp. This announcement was picked up by many on the media database.

Media Database

Now that you’ve crafted your new release, it’s time to send it out to a qualified database. First of all, you should always send it out to your local media, including newspapers and business journals. Also include local TV and radio if possible. You never know when someone needs a story like the one you send in or maybe just a filler story.

Also, you should build a list of aviation writers and editors. You can find these contacts in the front part of magazines and newspapers in what they call the masthead. Also, for most media, you can go to their web sites and get either specific email addresses or a generic one that goes to their news department. 

And don’t forget the electronic newsletters, like acukwikalert.com. They’ll be happy to review your release for posting.

In addition, you should give a courtesy call to a few of the selected media to make sure they received the information.

Electronic and Social Media

All news releases should be published on your Web site as well. Services like Google send out crawlers that search for keywords that help push your news item to the top of a search. Speaking of keywords, your release should use key industry words and phrases in both headlines and the body of your copy.

Also, post a link on your company’s Facebook page to your news release on your Web site, and issue a tweet to your followers.

If you have any questions regarding writing or issuing a news release, please contact me at Ron@thejacksongroup.biz.

Ron Jackson

Ron Jackson is co-founder of ABSG and president of The Jackson Group, a public relations agency specializing in aviation and FBO marketing. He has held management positions with Cessna Aircraft and Bozell Advertising and is the author of Mission Marketing: Creating Brand Value and co-author of Don’t Forget the Cheese!, the Ultimate FBO Customer Service Experience.

The Value of a Business Plan in Managing Your FBO

“A business plan is primarily an organizing tool used to simplify and clarify business goals and strategies, which might otherwise appear complex and intimidating. However, a business plan is also a sales tool. … Having no plan is like sailing the seven seas without a compass, digging a ditch without a shovel, or hunting for pirate's treasure without an 'x' marks the spot. Without one, you're better off heading down to the horse races and betting on the 'Win Three.' A plan helps keep you on schedule, makes it easier to recognize success and failure, helps pump you up when things aren't going so well, and most importantly, provides an essential focus.” – Peter J. Patsula, The Entrepreneur's Guidebook #9, "Supercharging Promising Projects with a Plan of Action.”

In some of our previous blog posts, we have mentioned the need to develop a strategic business plan, not only as a way to define business goals, but also to help formulate your personal goals, such as detailing an exit plan from your FBO business.

As most of you know, if you want to borrow money from a bank, the SBA or other sources, one of the first things they will ask you for is a business plan. This alone is a good reason to develop one. However, beyond this basic need, a business plan can be much more and serve your business in many different ways.

The quote above illustrates the many benefits in developing a business plan. As any pilot knows, without a proper flight plan, you will never get to your destination efficiently.

Developing a plan can be intimidating, but it’s not too bad when you keep it simple. Do some organized research on your business; ask some fundamental questions; do a SWOT (strengths, weaknesses, opportunities and threats) analysis; conduct a market and pricing analysis; then lay out your plan in an organized manner.

Plan Basics

Let’s look at some basics involved in developing a plan:

Company Description: First, we need to establish the baseline information for your firm, including the type of business you run, the management and employee structure and a statement to define the mission of your company as well as a sense of your vision and direction for the growth of the company.

Industry Analysis and Trends: Define the marketplace you operate in now and the near future; this includes seasonal factors, maturity of the industry, etc.

Target Market and Audience: Define what markets you serve and detail any new business areas in which you wish to operate. Also define your target audience or audiences (customer groups) you would like to attract to your business.

The Competition: Define and isolate your competition by looking in detail at not only your competitors on your airport but also within a 50- to 100-mile radius.

Strategic Position and Risk Analysis: Consider doing a SWOT analysis to evaluate your company’s strengths, weaknesses, opportunities and threats. Included should be an internal survey of all your employees to gain their input as well as vendors and suppliers who know your industry and perhaps sell to your competitors. Find out what may differentiate the way you do business from your competitors and use this to position your brand in the marketplace.

Marketing Plan and Sales Strategy: Analyze what you are doing to promote your business now, and develop new ways you can penetrate existing markets and branch out into others. Also, define your sales goals and objectives in terms other than the amount of money you want to make. Rather, state in terms of actionable items that can be obtained and measured in terms of results.

Operations: Review your existing business and how it operates — labor, equipment, technology, customer service and management information systems.

Community Involvement: We all know this is a relationship business, so include in your plan what you are doing, or willing to do, within your own general and business community. If you’re already involved, think what you would like to do better.

Development, Milestones & Exit Plan: Detail your long-term goals, growth strategy and exit plan including a timeframe to complete.

Financial Plan: This is the bottom line. Determine what the business is doing from a profit-and-loss point of view, and define the short-term and long-term capital needs to get where you want to go.

Guide Points

To sum up the critical path in starting, developing and finishing a plan, think of these three simple guide points:

• Develop a fundamental understanding of where you are today.
• Take a realistic view of your options moving forward.
• Think of your plan as a roadmap to success, a guide you refer to along the way to keep you on course.

The whole point of a business plan is to have firm ideas of where you are and where you want to go while realizing there are some hard choices to be made along the way. In the end, keeping focus is the key ingredient to success, and a plan will help you keep that focus.

Have any additional thoughts? Please email me at jenticknap@bellsouth.net.

John Enticknap

John Enticknap founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including as president of Mercury Air Centers. He is the author of 10 Steps to Building a Profitable FBO and developed NATA’s acclaimed FBO Success Seminar Series.

FBO Marketing, Part 1: Low- and No-Cost Promotion

Did you know there are ways you can market your FBO with little or no out-of-pocket expense?

At our NATA FBO Success Seminars, we examine various aspects of marketing for an FBO. One of the most popular sessions is Marketing and Communications for Any Size FBO.

Many FBOs that attend our seminars believe they can’t compete with the big FBO chains because they don’t have the money and resources. To that, I kindly say, “Bunk”. There are plenty of ways you can “shake hands” with your customers or potential customers without breaking your budget or robbing your kids’ piggy bank.

Getting Down to Basics

In the business of running an FBO, there are basically two ways to increase your business and, thus, the amount of fuel you sell.

1. Increase the number of base customers you service.
2. Increase the number of transient customers you service.

For the purpose of this blog post, we will concentrate on the second item of reaching out to the transient customer. However, if you are having trouble filling your hangars and think you can do a better job of increasing your base customer population, read on. There are tips for you as well.

Here is what I call the Level One, or Basic Communications, Checklist. You might be already doing these, but they are worth the review. These are not all free, but we’ll get to those shortly:

• A listing in a major FBO directory and Web site, such as AC-U-KWIK and acukwik.com. There are various listings and offerings to choose — some at little or no cost. You need to create some kind of awareness at the most basic level.
• Fuel supplier listing. Most FBOs have a relationship with a major fuel supplier. Make sure you are listed accurately in everything they produce, including their Web site and other promotions.
• Basic Web site. By now, most FBOs have built at least a basic Web site. Believe it or not, though, some companies forget to put their phone numbers up front to make it easy for the customer to make contact. Instead they bury it on an obscure page.

You must remember the most basic reason for a Web site is to provide information quickly. Therefore, you don’t need a lot moving pieces, fancy graphics, etc. Also, you should test the viability of your Web site in terms of search engine optimization (SEO) by doing a Google search of keywords for your area and business segment. Keep in mind keywords a customer would use to do a Web search. Some keywords for the fueling side of the business are obvious:

• FBO Dallas, TX (Your City and State) and FBO DAL (Your airport identifier)
• FBO Dallas Fort Worth (or) FBO North Texas
• Aviation Fuel Dallas, TX (or) Jet A Dallas, TX (or) Avfuel/Jet A DAL

Note: If your facility does not appear at or near the top after keyword searches, you need to look into rewriting the copy for your Web site to include keywords and phrases for your business segment and geographic locations. There are numerous free articles on the internet that can help you.

Web Site Tip: Refresh your copy on a regular basis. Keep keywords and phrases intact, but create something new that will be of interest. And don’t forget to post any press releases or news articles that may have been published. Look for ways to post your press releases to the free aviation sites, such as acukwik.com. Do some research, and create a PR database to which you may send your news.

• Get Social! Create a business Facebook page, list with LinkedIn, and investigate Twitter but only if you are serious about keeping social networks active and up to date with frequent posts.
• Giveaways. Don’t be afraid to put out a bunch of low-cost pens or other freebies at the customer service desk or in the pilots’ lounge. What’s the worst thing that could happen? So what if they disappear? That’s a good thing. They just might get back to the customer’s home base where a dispatcher gets a hold of one and, presto, your brand is right there, top of mind!

The Really Free Stuff

As mentioned, there are a number of things you can do that really don’t cost anything except some time and effort.

• I Spy Program. One of the techniques we teach at the FBO Success Seminars is creating your own I Spy Program. This is simply building a database of potential customers by tracking the transient customers who use your airport, or surrounding airports, but don’t come to your facility.

In the old days, you would simply use a pair of binoculars and scope out your competitor’s ramp and record the aircraft registration numbers. Now there are a number of electronic programs you can access that track flights into and out of your area. Usually a registration number is associated with the flight, and you can then cross-reference this registration number with a database of aircraft owners and operators. Some of these databases do cost money, but most that use these services do find them to be worthwhile.

Once you’ve started to build your database, send out a postcard to the potential customer offering an incentive to come to your facility on the next occasion. Incentives can be a one-time fuel discount, lav cleaning, interior cleaning, a fruit tray, etc. Note: Most of the time, one contact will not do the job. You need to be consistent and aggressive in making frequent contacts.

• Pick up the phone. Sounds simple, but if you can track a potential customer with an address, you should be able to get a phone number. Don’t be afraid to ask for their business.
• Be aware of customers who haven’t been back in a while. Getting customers to come back is like finding new customers. Again, pick up the phone, and find out why they haven’t been back. Ask them if you did something wrong, and offer an incentive to get them back in the fold.
• Be aware when a new customer does come in. Have your line service personnel and CSRs become aware when you do attract a new customer. Then be the restaurant owner. Meet, greet, thank him or her for the business, etc. And don’t forget the cheese!
• Write hand-written notes. It doesn’t cost anything to write a note thanking customers for their business. Anytime you can keep a customer coming back time and time again is one fewer customer you have to replace.
• Network, and be a part of the community. FBO owners, operators and general managers should use opportunities for community involvement, which will strengthen local aircraft owners and operators’ and their flight department staff’s awareness of your business. There are usually high-profile clubs, fellowships and nonprofit organizations that rely on volunteers that include high net worth individuals. Moving in the right circles can strengthen these relationships and help provide referrals. This is a great way to increase your base customer prospect list.

And because business aviation is such a small niche market, you never know who a pilot for a new base customer knows. Chances are they know more pilots at other companies who just might give you a try.

These are just a few strategies and tactics we teach at our FBO Success Seminars. If you have something that works for your FBO, please let me know by emailing me at Ron@thejacksongroup.biz.

Ron Jackson

Ron Jackson is co-founder of ABSG and president of The Jackson Group, a public relations agency specializing in aviation and FBO marketing. He has held management positions with Cessna Aircraft and Bozell Advertising and is the author of Mission Marketing: Creating Brand Value and co-author of Don’t Forget the Cheese!, the Ultimate FBO Customer Service Experience.



Is Your Cost of ‘Plastic’ out of Control?

Get a Grip on Credit and Debit Card Fees!

"The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday’s logic." – Peter Drucker

One of our more popular courses at our FBO Success Seminar is Maximizing Your Credit Card Transactions. We discuss in detail the credit /debit card processing system and how it affects your FBO business. Needless to say, the cost of this vital service is substantial and increasing.

Debit Card Update

First, let’s take a look at the use of debit cards. In the process of updating our seminar course materials, I’ve been researching the recently enacted regulations by the Federal Reserve to reduce debit card interchange fees. Here’s a little background information.

The new laws are still being written and are scheduled to be completed by April 21 with an implementation date of July 21. The laws change the fees from percentages to fixed fees. Some efforts in Congress may further delay the implementation or change the regulations.

Currently, debit card swipe fees average $0.44 per swipe. The new requirements reduce them to $0.07 to $0.12 per swipe. The banking and credit card industries are not in favor of the new requirements because they stand to lose some $12 billion in fees; therefore, they are lobbying Congress and others for changes.

As an example of the impact this would have on a retailer, look at The Home Depot’s operations. If the debit card fees are reduced as planned; The Home Depot will see a reduction of $35 million in debit cards costs. Obviously, the average FBO doesn’t have the volume of debit card transactions of a large box retailer, but we’re talking about potential savings over the long term and revenue to your bottom line.

A Look at Credit Card Fees

Regarding credit card fees, each transaction fee in the FBO business varies greatly. The fee can be zero for your branded oil company card to a high of four percent of the transaction. During the classes we teach at the FBO Success Seminar, we provide a detailed analysis of fees, but for now, here’s a look at an example of an average transaction:

First of all, the current national average cost of Jet A is $5.38 per gallon. Based on the Platts index, this average is an increase of more than 92 cents per gallon in only the last six months. For the FBO operator, this adds up to an increased credit card transaction charge of just over $0.02 per gallon or a total of $0.11836 per gallon, assuming the average fee is 2.2 percent. Under this scenario, a 500 gallon sale would result in credit card fees totaling $59.18, which includes an increase of $10.02 in extra charges resulting from the rise in fuel costs over the past six months.

We would venture to say that credit card fees are a bigger portion of your costs than you imagined!

If you are selling 1.5 million gallons a year at $5.38 per gallon, your annual credit fees will be $177,540. In this scenario, your credit card fees have gone up approximately $30,360 per year, based on recent fuel price increases.

Bottom Line

Here is the bottom line: The credit card processors are profiting during this crazy volatile spike in fuel prices, and the FBO is not! So what do we do?

The first step is to look at your processing fee costs and where the fees are being generated. Start by analyzing your sales and payment history:

• Retail sales and payment by what credit card or debit card?
• Factor out no-fee cards such as oil company cards.
• Factor out contract fuel sales. (By the way, are you getting paid promptly by the contract supplier?)
• Take a look at based customers vs. transient customer sales and payments.

Once you have completed your research, look at changing customer buying/payment habits, — not an easy task!

• You should want all your base customers paying with a no-fee oil company card. If they don’t, figure out an incentive to make this happen.
• For your transient customers, you should train your CSRs to ask for no-fee cards for payment.
• Make sure your contract fuel suppliers are paying you quickly and within contract terms. If they are late paying or otherwise, you need to rethink your contract fuel supplier relationships.

As your business changes with all the turbulence in today’s marketplace, you need to analyze all of your cost structure. Credit card fees are sometimes a cost we think we cannot manage. Not true!

With the tools and ideas we have presented here, these costs can be reduced. As Peter Drucker indicates in his quote, new thinking is most important in business, not only for this issue, but for all your business management concerns.

Let us know your thoughts on this issue or any of our FBO Connection blogs. Please contact me at jenticknap@bellsouth.net.

John Enticknap

John Enticknap founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including as president of Mercury Air Centers. He is the author of 10 Steps to Building a Profitable FBO and developed NATA’s acclaimed FBO Success Seminar Series.

FBO Customer Expectations: How High Should You Set the Bar?

“Start early, and begin raising the bar throughout the day.” –Bruce Jenner, Olympic athlete

Is the level of customer service expectation set high enough at your FBO? Does it meet or exceed the standards of the industry, or are you doing just enough to get by?

Recently, I was reading a customer service-related blog titled: “Did You Know You’re Competing with Apple?” The premise piqued my interest. Could it be possible the level of service a customer expects to receive at an FBO can be properly compared with the expectation of service offered by the top brands in their respective industries — companies like Apple, Virgin America and Amazon?

I was hooked on the notion. So I read on, and the more I thought about it, the more it made sense. Customers who walk into any FBO have already been exposed to the highest level of customer service possible because they are all consumers. They probably have been exposed to how Apple can make the mobile computing experience easy. Or to the way Amazon aids online customers in the selection process and then delivers the product in the blink of an eye.

I was on board when the blogger mentioned how Virgin America can customize the in-air experience by delivering food and in-flight entertainment the way you want it when you want it. So I reasoned, why can’t professional pilots and crew members expect a similar level of service when they deliver a CEO to his or her destination?

What Pilots and Passengers Expect

Remember, your customers, the pilots and crew members, have customers of their own. They’re the VIP passengers who are often the most well-heeled, high-net-worth individuals on the face of the planet.

You think an FBO manager’s job can be tough? Try keeping track of what each passenger likes to read, eat, listen to and watch. And, oh, by the way, remember to be the passenger’s confidant, and know their family history and names of children and pets. And while you’re at it, fly the airplane flawlessly!

Passengers on business aircraft are used to receiving the highest levels of service available. They dine at the finest restaurants, golf at the nicest country clubs and vacation at the swankiest resorts. Do you think their customer service bar is set high?

So once the world’s movers and shakers are carefully transferred from the comforts of the jet cabin to the perfect 72° interior of a waiting limo, what level of customer service should the crew expect when they set foot inside the FBO?

Hopefully the answer is the same level of service they just gave their passengers. Anything less is simply unacceptable.

As an FBO owner or operator, you can do several things to instill in your employees the level of service you would like to see and customers expect. One suggestion is to take small groups of employees, on occasion, out to eat at a very upscale restaurant. Let them see firsthand how a high level of service is delivered.

Maybe once a month, or once a quarter, reward an employee and his or her spouse with a night at the best hotel in the area. Have them take mental notes of the level of service and share their experience with the rest of the customer service team.

Occasionally issue a gift certificate to a deserving employee for a day at a spa at an upscale resort. The experience will probably transform the employee in a positive way.

What are you doing to raise the bar of customer service expectation at your FBO? I’d like to hear from you. Ron@thejacksongroup.biz.

Ron Jackson

Ron Jackson is co-founder of ABSG and president of The Jackson Group, a public relations agency specializing in aviation and FBO marketing. He has held management positions with Cessna Aircraft and Bozell Advertising and is the author of Mission Marketing: Creating Brand Value and co-author of Don’t Forget the Cheese!, the Ultimate FBO Customer Service Experience.

The Cost of Aviation Fuel

Why is the price continuing to increase, and what can an FBO do?

“Business, more than any other occupation, is a continual dealing with the future; it is a continual calculation, an instinctive exercise in foresight.” – Henry R. Luce

We think it’s fair to say we are all feeling the impact on fuel price increases over the last six months or so. As a pilot, I’m seeking the best fuel price and am modifying my flying patterns to get the best deal.

Historically, after an initial spike in oil prices, the market tends to settle down. So why haven’t we seen a stabilization in Jet A fuel prices? What’s causing the volatility in the open and spot fuel markets?

Besides the obvious affects of world events, including the disaster in Japan and political upheaval in the Middle East oil-producing regions, there are other underlying dynamics that contribute to rising aviation fuel prices.

What Others Are Saying

Let’s review a few articles that have been written lately.

• “Angry Over Oil Prices? Demand A Change In Fed Policy” by Charles Kadlec, Forbes Magazine 
• “Oil Spike Prompts Airline Profit Fears” by Jens Flottau and Madhu Unnikrishnan, Aviation Week  
• “Make Your Fuel Fly Farther: Strategies That Can Save You Money,” published by the National Business Aviation Association (NBAA) 

As discussed in Charles Kadlec’s article, the current Fed policy of keeping the value of the dollar low in the international markets is one of the main influences. Because it takes more dollars to buy a barrel of oil, the low dollar value pressure drives up the costs. It’s not necessary to review the entire article here, but suffice it to say the continued low value of the dollar is not going to reverse anytime soon.

In the article “Oil Spike Prompts Airline Profit Fears,” the authors discuss in detail the increasing cost of fuel and its effects on the airline industry. The airlines anticipated the increasing cost of fuel to be in the $75 to $90 range, but now a barrel of oil costs more than $108 this week. The economics of the airlines are such that a $1 increase in the price of a barrel of oil will increase the costs to the airlines more than $1 billion in a year.

As a result, the airlines are looking at a $10 billion cost increase in 2011 with fuel costs, on average, representing approximately 29 percent of the airlines’ operating costs. In order to gain back revenue, airline ticket prices are going up. Expect to see more fees and reduced flights with higher load factors.

The NBAA article details some similar statistics. They indicate 20 to 25 percent of a turbine operator’s cost of operation is fuel. The article notes, as we have discussed in previous blogs, that corporate operators are utilizing tactics such as using contract fuel providers, discounts with their base FBOs, tankering fuel and other fuel savings measures.

What Does the Crystal Ball Say?

As Henry Luce noted in his quote, in business we are always trying to look into the future. So looking into the crystal ball, what is going to happen with fuel costs, and what can we do about it? With the continued world unrest in the Middle East, oil prices will probably remain volatile.

The wild card in this equation is the Fed monetary policy. If the dollar remains weak, it’s our opinion the price of a barrel of oil is not going to go down anytime soon. Unfortunately, these factors are also going to slow down the economic recovery.

The bottom line: Just as the airlines are dealing with higher fuel costs, the cost of operating your FBO is going to go up and will probably not get any better soon. You’re also going to continue to see increased pressure on your fuel margin as aircraft operators, faced with their own budget problems, seek to negotiate better fuel prices.

So how do you survive during this fuel crisis? First, you must reconnect with your customers. Get out from behind the desk, and be a pro-active owner/operator. Be the restaurant owner!

Get to know your base customers and your transient customers. Learn their needs, wants and desires. By knowing your customers’ requirements, you can negotiate your own fuel delivery program that is customized to their operating parameters. At the same time, you minimize outside influences and maximize your returns. With regards to transient customers, you should already know who is flying into your location, so meet with them, and negotiate a reasonable service fee program which includes your fuel delivery.

Secondly, remember the Pareto 80–20 Principle.

Generally, the Pareto Principle is the observation (not law) that most things in life are not distributed evenly. It can mean all of the following things:

• Twenty percent of the input creates 80 percent of the result,
• 20 percent of the workers produce 80 percent of the result,
• 20 percent of the customers create 80 percent of the revenue,
• And on and on.

The Pareto Principle helps you realize the majority of results come from a minority of inputs.

As the FBO manager and chief marketing/sales person, this principle can help you concentrate your efforts by identifying your top customers — the important 20 percent that generate 80 percent of your business. That is the best bang for your buck. Know these folks well. This understanding of the vital few is what will make your business successful, and you can manage the change in cost of fuel.

Remember our premise as we forecast for the future. Concentrate on what you can control in a measured and methodical manner. We have little control over world events or what the Fed is going to do with monetary policy.

How are you dealing with the higher fuel costs? I’d like to know. Please email me at jenticknap@bellsouth.net.

John Enticknap

John Enticknap founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including as president of Mercury Air Centers. He is the author of 10 Steps to Building a Profitable FBO and developed NATA’s acclaimed FBO Success Seminar Series.

Measuring Your FBO Customer Service Experience

What’s Your CQ™ (Customer Quotient)?

In the recent series on Building Long-Term Profitable Customer Relationships, we talked about what makes a customer loyal (Are You the Restaurant Owner?); the perils of competing on fuel price (Do You Feel Lucky?); and finally, how to deliver the best customer service experience (Don’t Forget the Cheese!)

Now it’s time to measure the effectiveness of all your good work to improve the Customer Service Experience!

Just as a good measure of one’s intellect is the Intelligence Quotient or IQ test, at Aviation Business Strategies Group (ABSG), we have developed the means to test your FBO’s Customer Quotient or CQ™. The results of determining your CQ™ is a good measure on the overall effectiveness of your FBO customer service initiatives.

The Customer Service Survey Tool

The first step in the process of understanding your CQ™ is to develop an accessible and meaningful customer service survey tool. By accessible, we are talking about the convenience of the customer’s access to the survey.

Obviously, you should have it in a printed form and accessible at your customer service desk and perhaps in the crew lounge. For the printed version, make sure the survey is formatted so it can be easily mailed, including a No Postage Necessary Business Reply indicia.

For further convenience, put up a survey box near the exit to the ramp where customers can drop the completed printed survey so they don’t need to carry it with them for mailing at a later date.
In addition to having the survey available at the locations mentioned above, consider including it as part of a customer receipt envelope or holder, similar to the kind of money holder you get when you cash a check at a bank.

Lastly, make the survey accessible online through your company Web site. Just make sure there is a space for the customer to enter the date of service and perhaps a customer transaction number if there is one on the receipt. This will help you determine the validity of the information.

Make the Survey Meaningful

Here are some basic tips to make the survey easy for the customer to fill out and meaningful to you as a true measure of the customer service experience.

1. Keep it simple and logical. Don’t overthink the questions.
2. Make the questions relevant. Ask only questions about the service experience.
3. Keep it short. If you have more than five or six questions, your response rate will be way down.
4. Make sure you ask the ultimate question: “Would you recommend our FBO?”

The last thing you should do is put together a point value system for each question so you can convert the results into a metric that can be plotted over time. For instance, say you wanted to measure the following where 1 is a low score and 10 is the high score:

• Quality of line service: Rate 1 to 10 points.
• Friendliness of staff: Rate 1 to10 points.
• Cleanliness of facility/restrooms: Rate 1 to 10  points.
• Pilot amenities: Rate 1 to 10 points.
• Passenger amenities: Rate1 to 10 points.

With this section of your survey, you could have a potentially high score of 50 points if your customers rated all these items at 10 points each.

Now, let’s throw one last question into the mix. It’s really the most important, so we give it a value of 50 points. Yes, it’s that important! It’s either yes or no. All or nothing!

• Would you recommend? Yes/No?
  • Yes = 50 Points.

  • No = 0 Points.

The Sum of All Parts

In a perfect world, your customer service experience could potentially score 100 points. In keeping score over time, create a chart using the data obtained for the first five questions.

You may want to do a chart on a weekly basis at first. However, creating a monthly snapshot over a 12-month period will probably give you the best idea of the way your customer service experience is trending.

Then, do a separate chart to keep track of the Would you recommend? question. State the results as a percentage of the amount of customer service surveys returned.

The last thing you may want to do is post the results for all your employees to see. Follow-up with an employee team meeting and encourage feedback from both your customers and your employees regarding how to improve your customer service experience.

©The terms/phrases “Customer Quotient™” and “CQ™” are propriety in their intended use and considered intellectual property of Aviation Business Strategies Group.

Ron Jackson

Ron Jackson is co-founder of ABSG and president of The Jackson Group, a public relations agency specializing in aviation and FBO marketing. He has held management positions with Cessna Aircraft and Bozell Advertising and is the author of Mission Marketing: Creating Brand Value and co-author of Don’t Forget the Cheese!, the Ultimate FBO Customer Service Experience.

Flight Schools: Time to Think Outside the Box

“He who would learn to fly one day must first learn to stand and walk and run and dance; one cannot fly into flying.” – Friedrich Nietzsche, 1844-1900

Friedrich Nietzsche, a controversial philosopher for his time, made this statement before the Wright Brothers even flew, so we may assume he was not referring to the business of training people to fly. However, this quote has much relevance to our FBO flight training activities today.

It wasn’t that many years ago that the majority of FBOs were defined as “full-service companies” offering flight school training, new and used aircraft sales, charter, maintenance, hangars, and terminal facilities.

The business model was to market to potential pilots, both professional and recreational, train them, sell them an airplane, hope they would trade up, maintain the airplane, hangar it and, of course, sell them fuel and various services. As the pilot grew in experience and need, the FBO could make a good living by selling the next biggest aircraft.

It was a cradle-to-the-grave concept, and it seemed to work just fine.

The Changing FBO Business Model

However, in the last 30 years, the business of running an FBO has become much more specialized. It has evolved to the point that a full-service FBO is almost nonexistent. We now have businesses that have become SASOs (specialized aviation service organizations) that specialize in primarily fuel, line services and real estate management.

On one hand, I believe this has been a healthy trend for the industry because it allows the owners to specialize in a narrow facet of the FBO business based on their particular talents and knowledge.

On the other hand, this trend has taken the emphasis away from developing a growing pilot population. The growth of aviation is directly tied to maintaining a high interest in training new pilots. The pilot population topped out a number of years ago and has been declining ever since.

We hear all the usual arguments: high cost (by the way, it has always been costly to learn to fly), poor flight instructors, old slow aircraft, etc. AOPA recently completed a study of the student pilot dropout rate, so there will be more talk of that in the near future. That is a subject for another time.

Because many FBOs have chosen not to provide flight school training for whatever reason, an important resource is vanishing in many communities across the nation.

That leaves primarily the specialized schools to fill the void. We have a few national chain flight schools, those schools specializing in instrument training and individual schools that target specific market segments. These segments may include foreign students, those interested in recreational flying, Type A business executives with the means and motivation, and colleges, as well as others.

Pilot Retention

Besides attracting new pilots to enter a flight training program, one of the major problems flight schools have is retaining the interest of the pilots throughout the process. Historically, there is a drop-off after soloing and again after finishing training.

When a new pilot, be it a private pilot, recreational pilot or even those who are starting a piloting career, passes the final flight check, the big challenge for the flight school is to keep this new pilot coming back for more advanced training! This is when the flight school owner, instructors, staff — the whole team — needs to think outside the box and get creative in the area of retention.

In other words, they need a dynamic marketing plan to develop pilot-specific programs to grow the new pilot, keep the interest level up, improve skills and generally have fun. Remember, for the most part, you are competing for discretionary dollars, which can go for flying, boating, golf, sport cars, etc. Here are some ideas for keeping pilots at your flight school:

• Have pilots join the Wings Program, a pilot proficiency program that can be taken online as well as flying. Sign up at www.FAASafety.gov to create your own account, and educate your flight instructors. See the new Advisory Circular AC 61-91-J.
• Tail Wheel endorsement: This will make your new pilot a better pilot.
• Trip to ATC Facilities: Great for IFR and instrument rating trainees.
• Trip to Altitude Chamber: This is good for all pilots.
• Flight Reviews: Both VFR and Instrument Proficiently Check. Find the Instrument Proficiency Check (IPC) Guidance publication at  www.FAASafety.gov.
• Weekend Ground Schools.

What’s most important is how you market these programs. You need to have a customer base from your existing pilots, a database of the existing pilot population from a radius of 200-300 hundred miles, advertising in the local/regional aviation publications, an e-newsletter campaign, social media presence and a sustained community outreach to the interested pilot population. All this should be part of your original business and marketing plan.

So what can Friedrich Nietzsche teach us? For all successful business enterprises, we “must first learn to stand and walk and run and dance” before we can fly. And how do we fly? We develop and use a well-matured business plan, spend some time thinking creatively with the team and remember to add a little fun along the way.

If you’ve had success developing a flight training retention program, I’d like to hear from you. Email me at jenticknap@bellsouth.net.

John Enticknap

John Enticknap founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including as president of Mercury Air Centers. He is the author of 10 Steps to Building a Profitable FBO and developed NATA’s acclaimed FBO Success Seminar Series.

Building Long-Term Profitable Customer Relationships, Part 3: Don't Forget the Cheese!

In part one of this three-part series, Are You the Restaurant Owner? we talked about what makes a customer loyal and taking a hands-on approach to customer service. In part two, Do You Feel Lucky? we discussed the perils of lowering the price of fuel to attract new customers.

The following is the third installment:

Part 3: Don't Forget the Cheese!

“Here is a simple but powerful rule, always give people more than what they expect to get.” – Nelson Boswell

In the quest to build long-term profitable customer relationships, we can’t overlook the basic foundation of delivering exceptional customer service. At the end of the day, if you can’t walk up to a customer preparing to depart your FBO with confidence and ask the question, “Would you recommend us?” then please read on.

At Aviation Business Strategies Group (ABSG), we have analyzed various customer service training programs that help teach the basics. Many new customer service employees are not that familiar with general and business aviation and need a good understanding of the FBO business basics as well as the airport environment and flight operations. Mostly, these basic training videos and interactive teaching aids do a very good job of instruction on the mechanics of the job.

However, if your goal is to provide The Ultimate Customer Service Experience, you need to take your customer service training to a whole different level.

The Origin of “Don’t Forget the Cheese!”

While I was working my way through college, one of my jobs was at a restaurant that primarily served hamburgers. We always did a great takeout business, and one day a loyal customer stormed back into the restaurant with his sack of hamburgers in hand.

“I can understand not putting in napkins or forgetting the salt and pepper,” he huffed. “But when I order a cheeseburger, it would be really nice if there was cheese on it.”

Needless to say, we were all embarrassed, and the owner came out and apologized for the oversight and the inconvenience it caused. A few minutes later, the customer left with cheese on his cheeseburgers and a couple of coupons for a return visit.

Later that day, when we had a shift change, the owner pulled everyone together and made his point about carefully checking a customer’s order, especially the takeout orders. Lesson learned, as they say.

Then, as the first shift started to leave, a buddy yelled back to the cook and said: “Hey Charlie, don’t forget the cheese!” That comment kind of lightened up the mood and became our battle cry for the rest of the summer.

This experience stuck with me over the years, and when it came time to develop an advance customer service program for one of our client FBOs, it just seemed natural to brand it: Don’t Forget the Cheese!©.

Key Elements to Great Customer Service Training

There are several necessary elements in developing a good customer service program for your organization. Here are few:

• Make it memorable. By branding a program with a memorable phrase, it promotes buy-in from the employees.
• Make it fun. Let’s face it, customer service training can potentially be very boring.You can liven up the atmosphere with a little tongue-in-cheek humor to keep everyone focused and awake.
• Make it relevant. Include some real-life customer service experiences that happened at your FBO. Use these in role-playing sessions.
• Use three-dimensional teaching aids. For our Don’t Forget the Cheese! © on-site training, we have fun by introducing a variety of cheeses and of course crackers as well.
• Make it sustainable. Does your current customer service program have any legs? In other words, are elements built into the program to serve as occasional reminders that make it sustainable over time? After the initial customer service training is complete, most employees operate in the halo effect of something new. However, that halo can fade over time, so make sure you have a vehicle to keep the elements of your program top-of-mind.

The Fundamentals

The use of Cheese in our proprietary customer service training course also serves as key reminders to CSRs, as well as other employees, to practice exceptional customer service. Here are just a few of the fundamentals to great customer service:

• Smile. Remember to say, “Cheese,” to yourself, as if someone were taking your photo. Even when answering the phone, put on a smile and the customer on the other end will sense they are talking to a happy person.
• Add a little extra when delivering customer service. Because cheese is often used as a condiment, it represents the added touch, the little extra that puts a smile on the customer’s face and makes them keep coming back.
• Remember a customer’s name. In the FBO environment, adding cheese can be as simple as remembering a customer’s name. Most people react positively to being called by their name and are impressed when you remember. Are you the restaurant owner?
• Go the extra mile. Going the extra mile could be something as simple as showing the customer where the pilot lounge is located instead of pointing in the general direction.

For our sustainable part of the Don’t Forget the Cheese! program, we use Cheese Bites© that are little reminders of some of the principles of good customer service. These are sent periodically to employees electronically by e-mail or through the use of social media by the FBO.

If you would like to share a customer service tip, please send them to me, and I’ll publish them in a future blog post. Send them to Ron@thejacksongroup.biz.

©The terms/phrases Don’t Forget the Cheese! and Cheese Bites are proprietary in their intended use and considered intellectual property of Aviation Business Strategies Group.

Ron Jackson

Ron Jackson is co-founder of ABSG and president of The Jackson Group, a public relations agency specializing in aviation and FBO marketing. He has held management positions with Cessna Aircraft and Bozell Advertising and is the author of Mission Marketing: Creating Brand Value and co-author of Don’t Forget the Cheese!, the Ultimate FBO Customer Service Experience.

Optimizing Your FBO, Part 2: Cross-Train and Outsource

In Part 1 of Optimizing Your FBO, we talked about analyzing your business and investing in your front line employees. It just makes good business sense, even in tough economic times, to invest your time and resources in your front line employees because they have the first and the most important contact with your customers.

In this post, Part 2 of Optimizing Your FBO, I want to share additional strategies that will help prepare you to weather any kind of economic environment and increase the efficiency of your operation.

Cross-Train

For most FBOs, employees must learn to multitask — a term that management gurus have coined. It’s really a new term for an old axiom. The best employees, who do the best jobs, can do many different tasks. Gee, what a concept!

For FBOs that are consistently successful, employees do many different job functions that result in a more efficient operation and better employee morale. A happy employee, a happy customer. It can be a very contagious working environment that results in better customer service. Cross-training makes all employees more valuable and better motivated.

Let’s look at some ideas:

• Why not train your CSRs to meet and greet arriving aircraft? You’re already paying the Workers’ Compensation rate for ramp on the CSRs!
• How about training your CSRs and building maintenance staff to be wing walkers? Tip: Having two wing walkers, especially in hangar movements, can decrease your incident rate and could help lower your insurance premium, another cost savings.
• Get your accounting staff outside to learn about fueling and tank farm quality control. They might even learn about fuel quality control and inventory procedures.
• When was the last time the executive staff worked the ramp or talked to arriving pilots and passengers?
• Encourage ramp staff and the executive staff to walk the ramp for FOD and look at the FBO facility from the arriving pilot’s point of view.
• Your A&P mechanics need to meet, greet and be part of the customer’s maintenance project. Once the inspection is completed, the A&P should be part of the discussion with the owner on what is to be fixed; obvious but rarely done.
• In your flight school, when was that last time your chief instructor called and talked to the students before a check ride? Find out how the student likes flying and the learning experience.

Outsourcing

Many FBOs feel outsourcing is what big companies do, not smaller aviation service companies. The fact is, many services an FBO provides are not necessarily full-time, around-the-clock services. Outsourcing may actually save you money and help keep your front line employees focused on better serving the customer.

For instance, building cleaning, most especially restrooms. This service is not one most employees enjoy, so let’s outsource it. There are many vendors available to do this as well as provide the cleaning solutions, toilet paper, hand towels, etc. Get competitive pricing and monitor closely.

Another area is maintaining indoor plants as well as outdoor landscaping. This is a pain in the neck for most employees, but if you want a first-class FBO facility, you need to pay attention to interior details and keep the grounds well groomed. Get a number of bids, and again, monitor closely.

How about providing some extra services on an on-call basis? No overlapping costs while providing more services and a new stream of income. For instance:

• Aircraft interior cleaning
• Aircraft exterior services
• Quick-turns cleaning
• Customer car washing and detailing
• Customer car valet service

In larger cities or communities, there are vendors you can source that specialize in aircraft cleaning and detailing. In smaller communities, you may be able to find a good auto detailer that you can trust and help train to provide on-call services such as aircraft cleaning services, auto valet, customer car washing and detailing services.

What are some other ideas for cross-training and outsourcing? If you have some ideas that have worked at your FBO, please send them to me and I’ll include them in a follow-up blog. My email is jenticknap@bellsouth.net.

John Enticknap

John Enticknap founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including as president of Mercury Air Centers. He is the author of 10 Steps to Building a Profitable FBO and developed NATA’s acclaimed FBO Success Seminar Series.

Pricing Your FBO for Sale

Don't Get into the ‘Multiple’ Trap

As we start to see a small ray of sunshine peeking out from behind the lingering recession cloud, we find some encouraging news in the industry. Flight hours are increasing, used aircraft are starting to sell, and we see a resurgence in the continued consolidation of the FBO industry.

In the last couple of months, we have witnessed chain operators sell a couple of locations and sell one location to a competitor. We also saw the sale of a small chain to a larger chain. Therefore, I pose the proverbial question in the manner Harvard Business School types might ask: Is it time to “harvest” your business?

Only you can determine this. But if you’re getting into the sell mode, here are few things to keep in mind as you move forward.

Begin with the Business Plan

I’ve been involved in many FBO sale transactions over the years — both buying and selling various properties. The first order of business should always be to review your business plan. If your plan is in order, it will reveal the goals and objectives you have set for your business, which will help in the valuation of your assets.

Business plans we write for our clients include a section on exiting the business. Here the plan details a positioning strategy designed to maximize the value of your business whether you plan to leave a legacy to your family, retire with an income or just cash in with an outright sale.

Various sections discuss topics such as:

• A full- or part-time retirement scenario
• A succession plan to leave in place a strong management team
• Capital needs for the future
• Possible changes in the airport environment
• New business or personal opportunity
• Time to “cash in” — business has peaked

As part of the asset evaluation, you should be able to quantify the following:

• Current condition of your operating systems
  • Fuel operations
  • Accounting function
  • Facility maintenance
  • Ramps and hangars
  • Efficiency of employee team in place
  • Stability and diversity of your customer base
  • Measure of profitability
• Airport lease considerations
  • More than 10 years left?
  • Upcoming capital requirements for lease extension
  • Current lease is assignable to a new owner
  • Liability after sale on business and environmental issues
• Tax issues
  • Capital gains tax
  • Taxes on the sale
  • Get advice from tax experts
  • Review tax issues of buyer
• Legal and regulatory issues
• Current and proposed airport environment
• Identifying potential buyers

Sale Price Considerations

When consulting with clients who want to sell their FBOs, one of the first things they ask is: What multiple should I go for? Of course, they are referring to what the industry has conditioned them to expect: the “magic number” times the earnings before interest, taxes, depreciation and amortization (EBITDA). Or is it another magic number, such as EBIT, gross profit or even revenue?

I understand where they are coming from, but I caution not to get hung up on the multiple issue. Throwing around multiples like 5×, 10× and even 15× can quickly become a mental trap that often gets in the way of a true valuation of the business worth.

As our premise for this article indicates, the selling price of your FBO is not about the earning multiple but quantifying many of the questions we asked above. Some recent deals that have been consummated have no multiple. So what does that mean?

As you get into the pricing of your FBO, it’s imperative that you do a full-scale presale evaluation in order to further define and determine the terms gross profit, net profit and EBITDA. Because the eventual buyer will be doing his own due diligence, it’s important you do your own in advance so you can better understand the buyer’s valuation of your business.

Although you, as the owner, can have an understanding of the worth of your business, ultimately you can’t dictate what it is worth. Only the market can do that.

Develop a Selling Strategy

What is important to remember, if you decide to sell your business, is to seek professional assistance to walk you through the process, to help you properly position your business for sale. Also, an experienced professional can help you channel your efforts by identifying and targeting potential buyers.

For instance, one strategy would be to sell to one of your immediate competitors on your airport if one exists. Past experience says this will most likely give you the best deal.

Selling to your competitor allows the buyer to gain one of the most important business success factors: pricing power. (This can be a subject on its own merit and will be dealt with in another blog.) Suffice it to say pricing power will significantly increase the valuation of your business but cannot be so much that you make the transaction noncompetitive.

Ultimately, there are many factors that enter into the valuation decision. Businesses are sold for many reasons, and all those reasons affect the selling price. What both buyers and sellers must realize is that a satisfactory business deal for both parties must be concluded. Translation: Negotiate!

A purchase and sale agreement reached by the parties, if they succeed in reaching one, will be the result of bargaining. Depending on the relative bargaining positions of the buyer and seller, the purchase and sale agreement might reflect either compromise or capitulation, and, as a result, a valuation reasonable to the parties will be reached.

So don’t let the multiple trap get in the way. The multiple of earnings doesn’t really count in the transaction.  

Keep the goal in mind. The mission is not to simply conclude a transaction. The primary mission is to sell the business at a satisfactory price while guaranteeing payment is received when it is wanted and the way it is wanted.

John Enticknap

Before founding Aviation Business Strategies Group (ABSG) in 2006, John Enticknap was president of Mercury Air Centers' network of 21 FBO locations and has held executive management positions with DynAir Fueling and CSX Becket Aviation. He is an ATP- and CFI-rated pilot with more than 7800 flight hours, certified in both fixed- and rotary-wing aircraft, and the author of 10 Steps to Building a Profitable FBO.