Kick the Tires, Light the Fires: FBO Industry Poised to Take off in 2017

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By John L. Enticknap and Ron R. Jackson, Principals, Aviation Business Strategies Group (ABSG)

Note: FBO Connection bloggers John Enticknap and Ron Jackson, Aviation Business Strategies Group, will facilitate the next NATA FBO Success Seminar, March 7-8 in New Orleans.

After releasing the results of our Annual FBO Fuel Sales Survey at the NBAA Schedulers & Dispatchers (S&D) Conference in Fort Worth, we further validated the results and queried FBO operators on their outlook for fuel sales for the rest of the year.

What we encountered was nothing short of unbridled enthusiasm for an industry on the cusp of recovery after nearly a decade of depressed fuel sales, fluctuating fuel prices and continued consolidation. 

But before we celebrate by kicking the tires and lighting the fires for a robust takeoff in 2017, we need to throttle back just a little bit and rewind the results of FBO fuel sales for 2016.

Fuel Sales Survey Results

According to our survey, 2016 FBO fuel sales results were bittersweet. It was somewhat a case of haves and have-nots. More than 30 percent of FBOs surveyed reported a decrease in annual sales compared to 2015. Meanwhile, the very top performers, nearly 20 percent,  had healthy increases of more than 8 percent.

By contrast, the survey showed increased confidence for at least a mild recovery in 2017. Ninety-three percent of the responding FBOs predicted they would post at least the same fuel sales in 2017 or have increases ranging from 1 percent to more than 8 percent.

In addition, when asked if the economy was headed in the right direction, a resounding 54 percent said yes compared to only 8 percent responding no. Thirty-eight percent were undecided. By comparison, at the beginning of 2016, only 27 percent said the economy was headed in the right direction, last year’s survey found.

Looking Ahead

As verified through interviews with FBO operators at S&D, we are very bullish for at least a moderate recovery for 2017. However, for this to happen, the economy needs to expand. Economic expansion will provide more opportunities for Fortune 500 flight departments to utilize their aircraft as business tools in order to create reach within the marketplace.

This increased need for business-to-business connectivity will ultimately result in more flight hours, more fuel being sold and more airplanes to fix. With this goes the need to expand aircraft fleets through new and used acquisitions, more charter flights to fill extra lift requirements and more pilots trained to work the cockpits.

To be sure, the FBO operators we spoke to and surveyed paint a rosy picture for our industry, but it won’t happen overnight. Confidence in an improving economy has to remain strong.

As for those FBO operators we interviewed at S&D, many had good insights on the industry, and several pointed to the election of a new president with a pro-business agenda as having a positive effect of the FBO industry.

Here are some additional thoughts from the FBO operators we talked to at S&D:

  • “The last quarter of 2016 was very good as we saw a marked increase in flight activity at our airport. 2017 looks strong based on our January numbers.”
  • “Most FBO operators at this show seem to be very upbeat about the future. I think having a pro-business administration in Washington will help in the recovery of our industry. ”
  • “We can't get ahead of ourselves too much. There is still a steep hill to climb. But overall, the new administration is saying the right things. ”

And here are some comments from the Annual FBO Fuel Sales Survey:

  • "While I think the economy has been improving, it has been very slow. I have high hopes the new administration will accelerate the pace as well as have a positive impact on aviation.” 
  • "Until we get a better economy, fuel sales will remain flat. When the freight aircraft are back flying, it means the economy is immediately doing better.”
  • "I think our chances for improvement have been greatly enhanced by the election results."
  • "The economy will take time to recover. So will our business.”"

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

ABOUT THE BLOGGERS:

John Enticknap has more than 35 years of aviation fueling and FBO services industry experience and is an IS-BAH accredited auditor. Ron Jackson is co-founder of Aviation Business Strategies Group and president of The Jackson Group, a PR agency specializing in FBO marketing and customer service training. Visit the biography page or absggroup.com for more background.

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