Preparing for a New FBO Business Reality as U.S. Cases of COVID-19 Surge

Be ready to adapt and adopt a new cleaning standard

No matter how you look at it, the face of the FBO industry is once again changing, adapting and morphing into a new business reality brought on by the COVID-19 pandemic.

In the past 20 years, three major events have helped change the way the FBO industry goes about its business. First, the events of Sept. 11, 2001, forever changed the way the industry approaches security of aircraft, passengers and the delivery of fuel service.

Then, following the financial crisis of 2008, there were a rash of industry consolidations, the advent of more fuel-efficient aircraft, the practice of tankering fuel by aircraft operators and a plethora of third-party fueling brokers taking a piece of the refueling action. Thus, FBO owners and operators were faced with less margin to fund their operations.

The FBO industry adapted and survived to provide service for another day.

Now we are faced with a third event shaking the foundation upon which the FBO industry stands: the silent, stealthy and sometimes deadly COVID-19 pandemic.

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.

On top of that, FBOs that received Paycheck Protection Program (PPP) monies to help bridge the gap in a virtual business shutdown are now running out of capital from this source. They might be forced to furlough or lay off workers.

Unless there is another round of PPP funding soon, many FBOs could find it hard to meet future demand for business aircraft service once the true economic recovery starts. FBOs risk facing a potential lack of experienced staff if workers move on to other job opportunities.

In the meantime, FBOs need to look at additional streams of income manifested by the advent of the COVID-19 virus. Obviously, one example is instituting an interior aircraft cleaning service and charging for this service. Another example is charging a facility-cleaning fee because the internal FBO environment is just as critical to customer health and well-being as the interior of the aircraft. It is not cheap to render an FBO terminal virus-free. Extra costs for labor, personal protective equipment and cleaning supplies add up.

As we say in our NATA FBO Success Seminar, don’t give your services away. Be cognizant of what these types of services cost. In today’s business environment, where fuel uplifts have been severely curtailed, charging for ancillary services is crucial to the bottom line.

To help FBOs meet the needs of their customers and to provide a response to infectious diseases, NATA has introduced its Safety 1st Clean standard for the FBO industry. This standard is free and is produced by the NATA Safety Committee and COVID Task Force. It provides general guidance on facility cleaning, disinfecting and facility operations.

The Safety 1st Clean standard includes a self-certification process so FBOs can document the process of conforming to the standard. (Download the standard here.) Also, NATA has published a list of FBO locations that have completed the self-certification process.

In our next FBO Survival 2020 blog, we will cover how changing the current FBO business model will help FBOs deal with the loss of fuel sales by creating additional sources of income.

Please leave any comments you have about this blog post 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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