Over the next several blog posts, we will do an in-depth dive into each of these elements, providing valuable insight to help you navigate your way towards operating a more successful FBO business. For this blog post, we start at the top: Obtaining a long-term airport lease with extension options. Your lease with the airport authority is the lifeblood of your business. Here are the critical components of your airport lease that we will look at:
Read More7 Immutable Elements for Building Equity in Your FBO Enterprise ©
There are several reasons why FBO owners and operators should want to build equity in their operation. Chief among them are:
In creating a great customer experience at your FBO, sometimes you have to go outside the box and think organically.
By that we mean taking a leadership role that involves creating an internal culture where employees have a vested interest in the outcome of the enterprise. This is accomplished by treating all employees as true stakeholders.
Read More
Managing your brand equity is all about managing your stakeholder relationships. For the purpose of defining these terms, your brand is the name of your FBO and your equity is not only what you have invested in building infrastructure, it is also the investment in developing the kind of image that you want your brand to project.
Stakeholders are primarily your customers, employees, vendors and suppliers. These are the groups that can form an opinion of your FBO and can send or disseminate messages about your brand, whether positive or negative. That’s why managing these stakeholder relationships are critical to your success.
Read MoreIn managing the day-to-day activities of your FBO operation, it’s important to motivate your service team in order to reach your desired operational objectives.
In developing your objectives, think of what your desired goal is (which is essentially a desired outcome). Objectives will help you focus on any particular task at hand and serve as a focal point for your service team as they work to achieve these goals.
Engaging customers in a meaningful and thoughtful way creates the glue that binds them to your FBO brand and helps broaden your market reach.
The more reach or penetration you have in your geographic area or region of influence, the more awareness you create for your brand, resulting in potential gain in market share.
Attracting and keeping transient FBO customers starts with making a first good impression; it begins with ‘curb’ appeal, or more aptly, ‘ramp appeal.’
Just like in the real estate industry, how potential or new customers perceive your operations starts with the moment they first lay eyes on your facility as they taxi onto your ramp.
As the effects of the COVID-19 pandemic on the U.S. and world economies begin to wane, the FBO industry is bracing for a slow but positive recovery.
This is part of our FBO industry forecast for the next three quarters and into the first part of 2022. Our forecast, threaded below, is based on our Annual FBO Fuel Sales Survey, interviews with FBO owners and aircraft operators, analysis of the oil markets and the aviation fuel industry.
FBOs continue to face a pandemic shaking the foundation upon which the FBO industry stands.
Since our last blog post in May, there have been reports of positive progress in dealing with the virus outbreak, but, in the United States, the gains may be short-lived.
Going into June, many states started to open businesses according to government-issued guidelines. Early reports of increased business aircraft flight activity have been encouraging. Part 135 charter operators and fractional aircraft owner programs both reported higher than anticipated demand for their services. Customers were seeking an alternative to crowded commercial airline terminals and the close mingling of strangers in the confined space of a commercial airline cabin environment.
Now, as June ends with a series of the highest daily totals of new cases of infection, a COVID-19 resurgence has some states, such as Texas and Florida, backtracking their business re-opening plans. In fact, some states have considered restricting airline traffic coming from states with increased COVID-19 case activity. Is business aircraft traffic next to be scrutinized?
This start-and-stop pattern will undoubtedly have a boomerang effect on the FBO industry.
Beginning with this blog post, we are embarking on a new series that will highlight the best practices we have encountered over the past two decades in working with numerous FBO enterprises.
Included in the mix will be our personal file of best practices garnered from operating and managing a 21-base FBO chain, Mercury Air Centers, along with 11 insightful years of conducting the popular NATA FBO Success Seminars and, recently, the NATA Certified Customer Service Representative (CCSR) program.
We will cover almost every area of an FBO operation. We’ll discuss best FBO industry practices for two dozen topics. Read the full list.
No doubt you have noticed the increase in fuel prices. Since the beginning of year, Jet A has increased by more than 20 cents per gallon.
The impact on your FBO can be felt in cash outlay. For instance, if you recently purchased an 8500-gallon load of Jet A, you probably paid $1700 more than in early January.
If you haven’t been diligent about tracking fuel prices and adjusting your posted price along the way, a $1700 hit to the bottom line is substantial. What about increasing those contract prices that always seem to be too low?
By John L. Enticknap and Ron R. Jackson, Principals, Aviation Business Strategies Group
We often receive inquiries from FBOs and business aircraft handlers wondering whether IS-BAH (International Standards for Business Aircraft Handling) is right for them.
To answer this question properly, we have to take a look at each FBO and service provider individually to determine the merit an IS-BAH registration brings to the enterprise.
At face value, an IS-BAH registration has importance for many FBOs seeking to demonstrate to customers a commitment to a high level of international safety standards. Of course, safety is both a practical and necessary core value for a successful FBO operation. The IS-BAH registration process is a qualitative measure through which to demonstrate this commitment.
The benefits of an IS-BAH registration can include:
Promotional information for the IS-BAH registration process states that:
IS-BAH was established as a way to identify and promote the use of industry best practices by means of a progressive Safety Management System (SMS) for both Fixed Base Operations and Business Aircraft Handling Agencies (BAHA). IS-BAH follows the structure of the International Standard for Business Aircraft Operations (IS-BAO) Program and incorporates the NATA Safety 1st Ground Audit Program. The standard is based on the International Civil Aviation Organization (ICAO) standards as well as recommended practices in the preparation of handling business aircraft.
Although conforming to IS-BAH established standards is voluntary at this time, recognition for implementing and conforming to the standards can be confirmed through an auditing process which results in an International Business Aviation Council certificate of registration.
Central to the IS-BAH registration is the SMS that most charter operators have adopted over the past several years. Some of the FBOs that have already established IS-BAH registration have operated a charter department and have an SMS in place. Many of the FBOs seeking IS-BAH registration will probably not have an SMS in place, so they must develop one.
When we do an evaluation for a client seeking a potential IS-BAH registration, we look for whether or not the FBO or business aircraft handling company has truly invested in creating an internal culture that is safety oriented. We also want to see whether the organization has in place any of the required manuals and procedures that are described in the following evaluation checklist. If not, we can assist in writing and developing company-specific manuals along with training and implementing these plans.
The following is an abbreviated version of our IS-BAH registration checklist:
Having a written SMS document is one thing. Utilizing it and making it part of your safety culture is quite another. As mentioned, the SMS is central to the IS-BAH registration process. In order to attain an IS-BAH registration designation, there has to be demonstrable proof that the SMS is being utilized and that safety issues are being reported and acted upon.
Safety training programs, such as NATA's Safety 1st, help create a standardized teaching tool to ensure consistent levels of training. When IS-BAH auditors are engaged, they want to see that safety training records are kept on each individual employee involved in the aircraft handling process. They also want to see a history that the records are kept current and updated as needed. Therefore, a commitment to implementing and honoring these types of training programs needs to be demonstrated.
Part of the evaluation is determining whether the FBO or ground handling company has the proper staffing in order to ensure there is a commitment to both safety training and safety accountability. Usually, the owner/operator or FBO manager is the designated person of accountability. As President Harry S. Truman said, the buck stops here.
Adhering to current industry standards of effective best practices and detailing these practices in an SOP manual that is taught and utilized within the FBO enterprise are major parts of the IS-BAH audit review.
An ERP is a valuable resource that should be kept in a convenient and accessible location. It details emergency procedures and should include records of simulated emergencies that are being conducted and managed. An ERP is written to include protocols for interacting with specific emergency agencies on a local, regional and national level.
FBOs need to develop an EMS plan that incorporates their environmental responsibilities for dealing with hazardous materials and environmental issues including, but not limited to, sump fuel, batteries, waste oil, international garbage and aircraft noise abatement. As part of an EMS, FBOs must also include management of their SPCC (Spill Prevention, Control and Countermeasure) plan and coordinate with the airport staff on the proper procedures for the SWPPP (Storm Water Pollution Prevention Plan).
For the FBO that is not currently utilizing an SMS or is missing one or more of the items on the checklist, the IS-BAH registration process will take a little longer.
So is IS-BAH right for your operation? Hopefully we've provided enough information that you can get a sense of what you want to achieve. We encourage FBOs and ground handlers to consult with an IS-BAH specialist and, as required, attend the Fundamentals of IS-BAH Workshop. Also, you can give us a call or send us an email with any questions you have (404-867-5518; email: jenticknap@bellsouth.com).
ABOUT THE BLOGGERS:
John Enticknap has more than 35 years of aviation fueling and FBO services industry experience and is an IS-BAH Accredited auditor. Ron Jackson is co-founder of Aviation Business Strategies Group and president of The Jackson Group, a PR agency specializing in FBO marketing and customer service training. Visit the biography page or absggroup.com for more background.
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© 2016 ABSG
By John L. Enticknap and Ron R. Jackson, Principals, Aviation Business Strategies Group
In our previous blog, we wrote about developing a favorable hangar agreement as the lead post for our new series about crafting advantageous hangar, office and tie-down agreements, which together are the third component of the six intangibles that can build equity in your FBO.
In this post, we center in on crafting an advantageous office lease agreement.
As with a hangar lease agreement, an advantageous office lease agreement can help generate passive rental income for the FBO. Therefore, it should stand as a separate but complementary component if it is to be tied to a hangar lease package for a flight department.
In determining the value of an office space to be let, keep in mind that an office area is really premium space. It is often finished out and is heated, cooled and may be plumbed for hot and cold water as well as lavatory facilities.
An FBO has a couple of options to consider when leasing commercial office space. First, a triple net formula is often applied that takes into consideration the tenant or lessee agreeing to pay all real estate taxes, building insurance and maintenance in addition to any normal fees that are expected under the agreement to include rent, utilities, etc. In such a lease, the tenant may be responsible for a portion or all costs associated with the repair and maintenance of any common area.
The second option for a prospective tenant would be for the utilities, taxes, repair and maintenance to be included in the rental cost. This may be a simpler option for office space that is part of an office/hangar building. Multiple offices in a building may not have separate meters for electricity or water and may include multiple common areas such as lobbies, elevators, etc. The key issue for the FBO is knowing its costs of the facilities. They include the common areas and expenses for utilities debt service, lease costs, etc.
It’s important to keep in mind that like hangar agreements, FBOs should not devalue the true worth of office space in order to please a current or potential base tenant who wants a deep discount for the space based on promised potential fuel sales. It’s better to hold the tenant to measureable specific fuel sales goals that are spelled out in the agreement when considering any rent discounts.
As with hangar lease agreements, office lease agreements are a sublease and must conform to the master lease agreement your FBO has with the airport authority. Signatories to office subleases do have a right to know the contents of your master lease because they must also comply with its contents. In addition, terms for rate increases in your subleases should be similar to the master lease, and the term of subleases cannot be longer than the master lease term.
Please keep in mind that there are many factors and nuances to crafting an advantageous office lease agreement, and we will not be able to expound on all of them in the framework of a blog. Therefore, we encourage you to attend one of our FBO Success Seminars where we spend additional time discussing these important topics as well as others.
If you have a comment you'd like to share, please do so in the space provided below.
John Enticknap has more than 35 years of aviation fueling and FBO services industry experience. Ron Jackson is co-founder of Aviation Business Strategies Group and president of The Jackson Group, a PR agency specializing in FBO marketing and customer service training. Visit the biography page or absggroup.com for more background.
By John L. Enticknap and Ron R. Jackson, Principals, Aviation Business Strategies Group
In our previous blog, we concluded our four-part series on the 10 essential elements of a favorable fuel supplier agreement, which is the second component of the six intangibles that can build equity in your FBO.
In this blog post, we begin a new series about the third component, crafting advantageous hangar, office and tie-down agreements. Let’s start with the hangar agreement.
Hangars are among the most important real estate investments from which an FBO can generate true passive rental income. Therefore, the hangar footprint is golden ground to the FBO enterprise.
Too often, FBOs devalue the true worth of a hangar agreement. In the process of trying to please a current or potential base tenant, FBO owners and managers will provide a deep discount on hangar rent based on fuel sales potential. That’s why it’s important that the details of potential fuel sales be spelled out in the hangar agreement with specific language based on measurable fuel sales milestones.
Hangar lease agreements are a sublease and must conform to the master lease agreement your FBO has with the airport authority. Signatories to hangar subleases do have a right to know the contents of your master lease because they must also comply with its contents. In addition, terms for rate increases in your subleases should be similar to the master lease, and the term of subleases cannot be longer than the master lease term.
FBOs should have a more detailed agreement for the lease of an entire hangar complex to an individual or flight department, especially if the agreement is for a multiple-year term. Just as you have a written agreement with your airport authority, all prospective tenants should have written agreements for space within your FBO. In addition, FBOs should develop a rules and regulations document that spells out the dos and don’ts of tenants. Our final blog in this series will detail the rules and regulations section.
As part of your evaluation to determine rates and charges, it is imperative that FBOs determine the true cost of your real estate, including your hangars. Costs of the underlying land lease, construction or rent, maintenance, taxes, and utilities are all part the calculation. All these costs should be detailed and broken down on a per-square-foot basis.
FBO owners and managers should conduct a market study of comparable local and regional rental rates to determine the final rental cost to offer to the tenant. As mentioned, we recommend leasing your hangars for a profit and not subsidizing the lease cost based on potential future fuel sales. Instead, commit your lessee in writing to specific fuel uplift targets at an established price. Then detail an alternate pricing method that would go into effect if the targets are not met.
Please keep in mind that there are many factors and nuances to crafting an advantageous hangar lease, and we will not be able to expound on all of them in the framework of a blog. Therefore, we encourage you to attend one of our FBO Success Seminars where we spend additional time discussing these important topics as well as others.
If you have a comment you'd like to share, please do so in the space provided below.
John Enticknap has more than 35 years of aviation fueling and FBO services industry experience. Ron Jackson is co-founder of Aviation Business Strategies Group and president of The Jackson Group, a PR agency specializing in FBO marketing and customer service training. Visit the biography page or absggroup.com for more background.
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