The Top 5 FBO Operational Concerns for 2022
/By John Enticknap and Ron Jackson, Aviation Business Strategies Group ABSGgroup.com
As part of our Annual Fuel Sales Survey, we asked FBO operators for feedback regarding their concerns and greatest challenges facing the industry. An open-ended question resulted in these top five operating concerns for 2022.
- Inflation and higher fuel prices
- Ability to hire and keep employees
- Higher costs of doing business
- More government regulations
- Continued Covid concerns
Inflation and Higher Fuel Prices
In our annual survey, FBO operators voiced concern that inflationary pressures along with higher fuel prices might affect a consistent and sustained flow of aircraft traffic on their ramp this year.
Since business aircraft flight hours started to rebound early last year from the dismal covid induced recession of 2020, there has been a steady increase in month-to-month flight activity as reported by TRAQPak from ARGUS. At some point, this flight activity should start to flatten out to approximate levels registered in the pre-covid days of 2019.
Another factor that could hinder or slow flight activity is the spiraling cost of aviation fuel. Because most corporate flight departments operate on yearly budget forecasts, higher fuel prices can possibly put a squeeze on these budgets and start to limit the amount of flight hours scheduled and/or logged.
Ability to Hire and Keep Employees and Higher Costs of Doing Business
These two issues are intertwined. In a tight labor market, a shorter supply of capable FBO employees means FBOs are having to pay higher wages plus increased benefits to attract and keep workers, not to mention the continued cost of training in a higher employee churn environment. This adds to a growing concern for incurring higher costs of doing business. To exacerbate the problem, FBOs are paying more than ever for insurance, aircraft parts, equipment repair and other ancillary services.
For most FBO operators, this means they will have to pass along these costs through higher fuel prices as fuel margins need to be maintained. Thus, the inflationary spiral continues.
Another factor to consider for FBO operators is a rise in interest rates. The Federal Reserve has signaled that there will be multiple hikes in interest rates through the rest of 2022 and into 2023. For FBO operators who are planning capital improvement projects, our advice is to lock in a low interest rate sooner rather than later.
Challenging Times Ahead
To be sure, there are challenging times ahead for the FBO industry with many economic factors at play that are basically out of our control. Coming out of one of the darkest economic times in our industry, while learning to live and work in a drastically changed environment, has presented unprecedented challenges.
In our next blog, we will reveal the results of our FBO Fuel Sales Survey and provide our FBO Industry Forecast for 2022.
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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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