Tip of the Week: Our Top 10 Tips eBook

By John L. Enticknap and Ron R. Jackson
Aviation Business Strategies Group

For the last few years, we have written FBO Survival Tips that focus on the various strategies and tactics needed to survive the daily rigors of running a successful fixed base operation. After some great feedback, we decided to compile the 10 most popular tips into a comprehensive ebook resource for the FBO industry.

We are very proud to introduce FBO Survival: 10 Tips to Keep Your Operation Lean, Mean and Profitable. This book was made possible by the good folks at AC-U-KWIK and Penton. 

Acknowledging that market and economic conditions often dictate the size and scope of an operation, this book will help the FBO owner, operator and manager prepare for both the best of times and the worst of times and keep them focused on running a successful FBO.

In this book you’ll find 10 of our most popular tips as well as a bonus section, 3 Keys to FBO Success. Also included are some dashboard report templates you can use to keep track of your operation on a daily basis.

The book is available as a digital download at Amazon.com. Here is a thumbnail overview of each of the 10 tips:

FBO Survival Tip #1: Keep Your Customers Close and Your Margins Closer

In order to survive in any economic climate, FBOs should focus on the two most important revenue generators: valued customers & fuel margins.

FBO Survival Tip #2:  Avoid the “Ready, Fire, Aim” FBO/MRO Syndrome

To generate profitable transactions, FBOs must communicate across the enterprise, figure costs accurately and not overpromise.

FBO Survival Tip #3: Don’t Give it Away!

As fuel margins get squeezed by aircraft operators and fuel broker discount programs, FBOs need to charge for “free services” instead of giving them away.

FBO Survival Tip #4: Develop an Early Warning System

A crucial FBO survival strategy involves developing early warning reporting metrics designed to keep your fingers on the pulse of FBO operations.

FBO Survival Tip #5: Prepare to Operate in Your New Normal

After every major economic downturn, FBOs must establish a new operating benchmark that becomes their new normal moving forward.

FBO Survival Tip #6: Take Off the Blinders

FBO operators and managers can’t effectively run their facility without getting involved by walking around to gain a customer’s perspective.

FBO Survival Tip #7: Ask the Tough Questions!

If you don’t know what your customers think of your FBO operation, then you’re not asking the really tough questions.

FBO Survival Tip #8: Be a Savvy Business Operator

The FBO owner and manager should know and understand all aspects of the operation and what drives business profitability.

FBO Survival Tip #9: Avoid the Status Quo

About the time an FBO operator thinks things are running smoothly, that’s the time complacency sets in and things begin to slide.

FBO Survival Tip #10: Sharpen Your Negotiation Skills

Building successful stakeholder relationships in the FBO business often includes skillful negotiations. Sharpening these skills and thinking win-win are critical elements to getting what you want. 

FBO Survival Bonus: 3 Keys to Success

As an FBO Survival book bonus, the authors have detailed 3 fundamental keys to FBO operational success. 

About the bloggers:

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.

Tip of the Week: Make Your FBO Data Driven

By John L. Enticknap and Ron R. Jackson
Aviation Business Strategies Group

Just as pilots rely on the instrument panel to keep up and stay ahead of potential problems, FBOs should rely on data-driven dashboards to do the same thing.

Operational and financial data fed on a regular basis to the FBO operator is an essential element of running a successful business. They’re a quick snapshot you scan to make sure the engine of your company is running smoothly.

Setting up a dashboard is similar to a pilot setting up waypoints. You preselect the data you want to see and have it delivered to your desktop on a daily basis.

Here are some suggested data points to set up on your dashboard:

Line Service Business

• Review your previous day’s retail fuel sales.
• Contract Fuel Sales.
• Airline Fuel Uplift.
• Month-to-Date retail fuel sales.
• MTD Contract Fuel Sales.
• MTD Airline Fuel Uplift.
• Budget retail fuel sales, contract and airline fuel sales.
• Number of Customer Contacts Yesterday.

Maintenance Business

• Mechanic Hours Billed yesterday.
• Mechanic hours of vacation, paid leave.
• Mechanic hours paid.
• Yesterday Mechanic Productivity.
• Month-to-Date Productivity.
• Budget Productivity.
• Parts Sales Dollars.
• Budget Parts Sales.
• Support Staff hours paid.
• Number of Customer Contacts.
•  Number of annuals/100 hr./inspections bid.

Flight Operations

• Flight Instructor hours billed yesterday.
• Flight Instructors hours paid.
• Flight Instructor Productivity.
• Charter hours billed.
• Charter hours available.
• Charter Productivity.
• Customer Contact - Flight Instruction.
• Sale Contacts for Charter.

You’ll notice we are getting sales data, labor data and marketing data. After cost of sales, labor is your biggest expense. Labor hours must be reviewed and managed to assure you maximize productivity.

Also, you must keep track of your marketing activity. This is something you should touch on daily, focusing on both retention of existing customers and obtaining new customers. We know this is stating the obvious, but if you don’t grow, you go out of business. Every year there can be as much as a 30 percent churn in turnover of base customers and regular transient customers.

In setting up your dashboard data requirements, make the adjustments with your accounting personnel as well as department managers to collect this data.

If you are uncertain as to how to set up a dashboard properly as well as the interpretation of the data, we suggest you attend an NATA FBO Success Seminar. The next seminar is scheduled for March 9-10 in Las Vegas. At these seminars we suggest a number of simple strategies and tactics to assist you with data management.

Great Customer Service. The Universal Language Spoken Everywhere.

John Enticknap, Charlie Bodnar and Ron Jackson with Euro Jet agents in Prague

By John L. Enticknap and Ron R. Jackson
Aviation Business Strategies Group

Recently we were approached by Charlie Bodnar, the CEO of Euro Jet, to see if we might be interested in teaching our Don’t Forget the Cheese!© FBO customer service training program at their Global Network Forum scheduled for January in Prague. Euro Jet is a leading international provider of both flight and ground support services.

At first, we were a little concerned our Americanized content would possibly lose some meaning half way around the world in a very different culture. However, our fears were quickly erased as Charlie explained that more than 60 percent of Euro Jet’s customers were U.S. based flight crews.

“It may sound crazy teaching our people American service standards,” Charlie asserted when we met in October at the Annual NBAA meeting in Orlando. “But this market is very important to us and we want to make sure we meet our customer’s expectations.” 

So on Jan. 12 we packed our bags and headed to Prague. We were still a little unsure if we would be able to adequately communicate the principles of our program that’s been popular in various parts of the good old U.S. of A. but had never stood the international test on the other side of the pond.

Upon arrival, we met with Zaneta Balochova who handles marketing at Euro Jet. She was quick to put us at ease as we were given a preview of the room in which we would be teaching at the historic Boscolo Hotel near Prague’s Old Town.  As the agents began to filter into the room, we started to chit chat a little and practiced pronouncing their names.

There was Ulrika from Estonia, Marian from Bulgaria, Eugenijus from Lithuania and Robert from Macedonia, among many others. We were immediately impressed by their command of the English language, although not altogether surprising since English is spoken throughout the international aviation community. Still, the little nuances that started to creep into our mini conversations gave us encouragement that we would be understood well beyond the basics.

What was most interesting is how these agents, some 70 of them from 20 countries in Europe and Asia, learned to speak English. Several we talked to said they watched and studied subtitled American movies, repeatedly, practicing the English dialogue over and over again. Now that’s dedication!

However, the universal language that brought us all together was customer service. Here we found middle ground, striking a common chord that resonated throughout the entire room.

The agents quickly understood that the objective of providing excellent customer service was to gain a long-term, profitable customer relationship. Just as we teach in our NATA FBO Success Seminar, they promptly recognized that the surest way to differentiate their brand from the competition was by offering a great customer service experience.

They also embraced enthusiastically the true test of whether a great customer service experience was achieved by asking one simple question of the customer upon departure: “Would you recommend us?”

We can tell you, unequivocally, that we would recommend the good folks at Euro Jet … in a heartbeat. Not because we were their guests and taught them the American way. Rather, and most importantly, it’s because they got it. They intuitively understood that providing great customer service is a universal language, appreciated and understood by loyal customers anywhere in the world.

For a compelling Euro Jet perspective of our training experience in Prague, we invite to read a companion blog written by Gareth Danker, Director of Global Sales and Marketing. Please click here for content.

About the bloggers:

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. For more background, visit the biography page or www.absggroup.com.

Flight Training Programs Benefit from Out-of-the-Box Thinking

By John L. Enticknap and Ron R. Jackson, Principals of Aviation Business Strategies Group

- Facilitators of NATA’s FBO Success Seminar and Authors of the forthcoming book: FBO Survival: 10 Tips to Keep Your Operations Lean, Mean & Profitable

This article from the archives analyzes how FBOs with flight training programs can make the most of their flight schools as aviation services become more specialized and while the pilot population is declining. It was originally published on March 24, 2011.—Ed.

“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.

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

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.

About the bloggers:

John Enticknap
John Enticknap has more than 35 years of aviation fueling and FBO services industry experience and has served as president/CEO of Mercury Air Centers, a network of FBOs he grew from four facilities to 21 locations. He has international FBO experience including opening the Royal Aviation Terminal in Kuwait. John has held executive management positions with DynAir Fueling and CSX Becket Aviation and holds a Bachelor of Science in industrial management from Northeastern University. He teaches the acclaimed FBO Success Seminar for the National Aviation Transportation Association (NATA) and is an NATA certified safety auditor. John is the co-author of the forthcoming book FBO Survival! Keeping Your Operation Lean, Mean & Profitable. He also writes an industry blog titled FBO Connection for Penton‘s B&CA Digest. He is an active ATP and CFI rated pilot with more than 8,100 flight hours; certified in both fixed and rotary wing aircraft. jenticknap@bellsouth.net, Ph: 404-867-5518, www.absggroup.com

Ron Jackson
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. He has held management positions with Cessna Aircraft, Fairchild Aircraft and Bozell Advertising. Ron developed the strategic marketing communication plan and programs for Mercury Air Centers and consults with numerous FBOs in areas of marketing, promotions and customer service training. He is the author of Don’t Forget the Cheese! The Ultimate FBO Customer Service Experience. and co-author of the forthcoming book FBO Survival! Keeping Your Operation Lean, Mean & Profitable. He is a journalist and co-developed NATA’s acclaimed FBO Success Seminar Series. Ron writes an industry blog for Penton’s B&CA Digest titled: The FBO Connection.  Ron@thejacksongroup.biz,  Ph: 972-979-6566, www.absggroup.com

Originally Published on March 24, 2011.

Results of Our Annual FBO Industry Survey Predict 2.5% Average Fuel Sales Increase for 2015

By John L. Enticknap and Ron R. Jackson, Principals of Aviation Business Strategies Group

- Facilitators of NATA’s FBO Success Seminar and Authors of the forthcoming book: FBO Survival: 10 Tips to Keep Your Operations Lean, Mean & Profitable

This week at the NBAA Schedulers and Dispatchers (S&D) Convention in San Jose, CA, we will release the results of our Annual FBO Industry Survey and Forecast for 2015.

We are happy to report that for the first time in several years, we’re seeing a glimmer of optimism amongst the majority of FBO owners and operators we encounter and are included in the survey. In a nutshell, the results indicate a current market that has yet to catch any real traction but also one that is being approached with guarded optimism with more than 60 percent predicting an average increase in fuel sales of at least 2.5 percent. (See related chart.)

This projection follows another year when fuel sales were depressed with the majority reporting an actual decrease in sales in 2014.

Overall, the outlook for 2015 shows a perceptible increase in optimism compared to the results from the 2014 survey where the majority of respondents predicted at least a breakeven marketplace with only about 40 percent projecting an increase in fuel sales volume.

Conversely, in our 2015 survey, more than 60 percent predicted an increase in fuel sales, which represents a positive upswing of 20 percent.

As far as forecasting confidence in the economy, the majority of survey respondents moved from having little or no confidence in 2014 to a comfortable middle ground position in 2015. Last year, the majority said the economy was not moving in the right direction. For 2015, most said they are undecided. Again, we see this is an indication of guarded optimism.

In what we call our high-water benchmark, 18 percent of those surveyed this year said they predicted an increase in fuel sales of 5 to 8 percent. This compares to 10 percent responding to the same question in 2014. And for the really strong performers, 8 percent of respondents said they expect an increase in fuel sales of more than 8 percent, which is the same result for last year’s survey.

An added question to this year’s survey queried respondents on whether the recent decrease in oil prices has affected the number of aircraft flying into their FBO. An overwhelming majority said the amount of traffic has remained about the same.

What we saw in the comment section of our survey is a general observation that piston aircraft owners and, in particular, the weekend enthusiasts are starting to fly more with lower posted avgas prices. Also, many who responded indicated that aviation fuel prices will not come down as quickly as auto gas because there is still a lot of higher priced fuel in inventory at airport storage facilities.

In looking at flight hours flown by general aviation and business aircraft, which we know is a key statistic linked to potential FBO fuel sales, the numbers continued to be flat in 2014. As a result, we really don’t see flight hours increasing in the short term, even though fuel prices are coming down.

Based on our survey findings, we forecast aviation fuel prices continuing to drop throughout 2015 with no appreciable increase in flight activity until the third quarter.

If you are attending the S&D Conference, we would like to see you so please stop by the ACUWKIK Booth #1723. Also, please attend our special Exhibitor Session at 5:15 pm in the Exhibit Hall.

In addition, there will be a drawing at the National Air Transportation Association (NATA) booth #1511 for a free registration for our next NATA FBO Success Seminar scheduled for March 9-10 in Las Vegas. Registrants will receive a free copy of our new book, FBO Survival! 10 Tips to Keep Your Operation Lean, Mean and Profitable. The free registration and book are valued at more than $700.

About the bloggers:

John Enticknap
John Enticknap has more than 35 years of aviation fueling and FBO services industry experience and has served as president/CEO of Mercury Air Centers, a network of FBOs he grew from four facilities to 21 locations. He has international FBO experience including opening the Royal Aviation Terminal in Kuwait. John has held executive management positions with DynAir Fueling and CSX Becket Aviation and holds a Bachelor of Science in industrial management from Northeastern University. He teaches the acclaimed FBO Success Seminar for the National Aviation Transportation Association (NATA) and is an NATA certified safety auditor. John is the co-author of the forthcoming book FBO Survival! Keeping Your Operation Lean, Mean & Profitable. He also writes an industry blog titled FBO Connection for Penton‘s B&CA Digest. He is an active ATP and CFI rated pilot with more than 8,100 flight hours; certified in both fixed and rotary wing aircraft. jenticknap@bellsouth.net, Ph: 404-867-5518, www.absggroup.com

Ron Jackson
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. He has held management positions with Cessna Aircraft, Fairchild Aircraft and Bozell Advertising. Ron developed the strategic marketing communication plan and programs for Mercury Air Centers and consults with numerous FBOs in areas of marketing, promotions and customer service training. He is the author of Don’t Forget the Cheese! The Ultimate FBO Customer Service Experience. and co-author of the forthcoming book FBO Survival! Keeping Your Operation Lean, Mean & Profitable. He is a journalist and co-developed NATA’s acclaimed FBO Success Seminar Series. Ron writes an industry blog for Penton’s B&CA Digest titled: The FBO Connection.  Ron@thejacksongroup.biz,  Ph: 972-979-6566, www.absggroup.com

Visit FBO Connection Bloggers at 2015 Schedulers & Dispatchers Conference

By John L. Enticknap and Ron R. Jackson, Principals of Aviation Business Strategies Group

- Facilitators of NATA’s FBO Success Seminar and Authors of the forthcoming book: FBO Survival: 10 Tips to Keep Your Operations Lean, Mean & Profitable

The team at Aviation Business Strategies Group and FBO Connection bloggers, John Enticknap and Ron Jackson, will be attending the 2015 NBAA Schedulers & Dispatchers Conference next week in San Jose, Calif., and would love to touch base.

We’ll be conducting the Preconference Exhibitor Session on Tuesday, Feb. 3, at 5:15 p.m. in the Convention Center Exhibit Hall that will include a brief overview of our Annual FBO Industry Survey for 2015. Many of you have participated in this survey, and we thank you very much. We think you will be a little surprised at the results, so we encourage you to attend.

During the S&D Conference, please visit the AC-U-KWIK booth — 1723, 1725 and 1727 — and take a peek at our new ebook that is coming out: FBO Survival! 10 Tips to Keep Your Operation Lean, Mean and Profitable.

Also, please save the dates of March 9-10 for our acclaimed NATA FBO Success Seminar at the Sands Convention Center in Las Vegas. We hope to see you there as well.

Lastly, we’d like to thank the good folks at Euro Jet for having us as guest speakers at their training event in Prague on January 14 and 15. They are a great group of people, and we enjoyed bringing our Don’t Forget the Cheese! customer service training program to this part of the world.

See you at SDC2015.

John and Ron

About the bloggers:

John Enticknap
John Enticknap has more than 35 years of aviation fueling and FBO services industry experience and has served as president/CEO of Mercury Air Centers, a network of FBOs he grew from four facilities to 21 locations. He has international FBO experience including opening the Royal Aviation Terminal in Kuwait. John has held executive management positions with DynAir Fueling and CSX Becket Aviation and holds a Bachelor of Science in industrial management from Northeastern University. He teaches the acclaimed FBO Success Seminar for the National Aviation Transportation Association (NATA) and is an NATA certified safety auditor. John is the co-author of the forthcoming book FBO Survival! Keeping Your Operation Lean, Mean & Profitable. He also writes an industry blog titled FBO Connection for Penton‘s B&CA Digest. He is an active ATP and CFI rated pilot with more than 8,100 flight hours; certified in both fixed and rotary wing aircraft. jenticknap@bellsouth.net, Ph: 404-867-5518, www.absggroup.com

Ron Jackson
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. He has held management positions with Cessna Aircraft, Fairchild Aircraft and Bozell Advertising. Ron developed the strategic marketing communication plan and programs for Mercury Air Centers and consults with numerous FBOs in areas of marketing, promotions and customer service training. He is the author of Don’t Forget the Cheese! The Ultimate FBO Customer Service Experience. and co-author of the forthcoming book FBO Survival! Keeping Your Operation Lean, Mean & Profitable. He is a journalist and co-developed NATA’s acclaimed FBO Success Seminar Series. Ron writes an industry blog for Penton’s B&CA Digest titled: The FBO Connection.  Ron@thejacksongroup.biz,  Ph: 972-979-6566, www.absggroup.com

FBO Survival Series - Survival Tip #10: Sharpen Your Negotiation Skills

By John L. Enticknap and Ron R. Jackson, Aviation Business Strategies Group

Editor’s Note: Meet our bloggers, John and Ron, at the AC-U-KWIK booth No. 1004 at the NBAA S&D Conference in New Orleans, Jan. 14-17. Register to win a free registration fee to the next NATA FBO Success Seminar, March 24 and 25 in Las Vegas, a $650 value. Also, join John and Ron on Jan. 17 at the S&D 10:30 a.m. session on: Get Ready for a New FBO Business Model.

Welcome to the next installment of our continuing AC-U-KWIK FBO Connection Series: FBO Survival. This series focuses on the various strategies and tactics needed to survive the daily rigors of running a successful FBO operation.

"My father said, ‘You must never try to make all the money that's in a deal. Let the other fellow make some money too, because if you have a reputation for always making all the money, you won't have many deals.'"
- J. Paul Getty

As we start the new year, it’s never too early to get out the old business tool kit and sharpen a few skills that will help you survive in 2014. The art of negotiation is one skill that we can use every day in running a successful FBO operation.

In a broad sense, negotiating skills can be used in a variety of situations, including dealing with employees, customers, investors, vendors and suppliers; virtually all your stakeholders.

The FBO business is a relationship business and for relationships to be successful, your negotiating style is very important. We believe in win-win negotiations where both parties feel a sense of gain. However, if you are set on negotiating a one-sided win, the result is often a short-term solution.

There are many different styles of negotiating and the style we feel works the best is based on compromise, accommodation and collaboration.

In preparing for a negotiation, here are few things to keep in mind:

• What are your goals?
• What are the goals of your negotiating partner? (Note partner, not adversary)
• Do you have common ground with your partner?
• In what type of environment are the negotiations going to be conducted?
• Are you facing a very competitive partner who wants to win at all costs?
• What is going to be your opening position?
• At what point do you walk away? Or do you have that option?

Knowledge is key to any negotiation. If you are negotiating something major, such as a new lease with the airport authority, you must research your partner and know as much as you can. This includes gathering any personal background information as well as history on prior negotiations.

The FBO and aviation services business is generally a very small community. If your style is confrontational and aggressive, as opposed to a businesslike approach where goals are mutually appreciated, you tend to be less successful in the long run.

In an ideal situation, you will find that the other person wants what you are prepared to trade, and that you are prepared to give what the other person wants. Ultimately, both sides should feel comfortable with the final solution if the agreement is to be considered win-win.

If you can answer yes to the following questions, then your negotiations have been fruitful:

• Have most or all of your goals been met?
• Has your partner met their critical goals also?
• Is your relationship with your negotiating partner good?
• Are the outcomes of the discussions better than other alternatives?

The most sensible outcome is to have ongoing relationships with your negotiating partner. This is particularly important when dealing with a disgruntled customer. As we all know, the aviation business is a small community and if you’re in it for any period of time, you will meet the same people again and again, sometimes in different capacities. Therefore, it is in your best interest to have a reputation as a fair negotiator.

During our upcoming NATA FBO Success Seminar to be held March 24 and 25 in Las Vegas, we will be discussing the major elements of negotiating an airport lease as well as a fuel sales agreement. Please join us for this event. Past attendees say it’s like taking a short course on how to run a more successful FBO.

Tell us what you think—we appreciate your comments and thoughts.

Send us an email to Ron@thejacksongroup.biz or jenticknap@bellsouth.net.  Also, learn more about negotiating airport leases, fuel supply agreements and exceptional customer service at our next NATA sponsored FBO Success Seminar to be held March 24 and 25, 2014, in Las Vegas. Click here to register.

About the bloggers:

John Enticknap
John Enticknap founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including President of Mercury Air Centers network of 21 FBO locations. He is an ATP and CFI rated pilot with more than 7,800 flight hours and is the author of “10 Steps to Building a Profitable FBO”. John developed NATA’s acclaimed FBO Success Seminar Series and writes an industry blog for AcUKwikAlert.com titled: The FBO Connection.

Ron Jackson
Ron Jackson is Co-Founder of Aviation Business Strategies Group and President of The Jackson Group, a PR agency specializing in FBO marketing and CSR training. 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. Ron co-developed NATA’s acclaimed FBO Success Seminar Series and writes an industry blog for AcUKwikAlert.com titled: The FBO Connection.

There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things

FBO Survival Series - Survival Tip #9: Avoid the Status Quo

By John L. Enticknap and Ron R. Jackson, Aviation Business Strategies Group

Welcome to the next installment of our continuing AC-U-KWIK FBO Connection Series: FBO Survival. This series focuses on the various strategies and tactics needed to survive the daily rigors of running a successful FBO operation.

"Status Quo, you know, is Latin for ‘the mess we’re in.'"
- Ronald Reagan

About the time you think you’ve got your FBO running smoothly, that’s the time you need to step back, reevaluate, get back out on the floor and see what’s going on. If you are willing to accept the status quo, chances are you’re becoming a little too complacent and that can spell disaster in any business.

Case in Point

Recently, an independent aviation consulting firm conducted a fuel-brand phone survey of FBOs. In most cases, the person answering the phone was a customer service representative. The consulting firm simply asked: “What brand of aviation fuel do you sell?”

Shockingly, more than 30 percent of respondents did not know the answer. That’s one in three!

This begs the question: What else don’t your employees know about your business?

Knowing the basics of your business is essential. However, a greater understanding of some of the technical points of fueling and servicing an aircraft by all employees instills greater customer confidence.

One of the best ways to help a new CSR understand your business is to cross train the employee beginning with line service. Let them get out on the ramp and learn firsthand from your most experienced line service technician. And, alternatively, have your line service technicians spend some time observing and helping out at the front desk, in the lounges, and even cleaning bathrooms.

Some business modelers call this job enrichment. They’ve observed an increase in employee morale when horizons are expanded and other skills are experienced and learned.

If you are running an FBO that does more than sell fuel, like maintenance, flight school and perhaps charter, you would probably want your frontline employees equipped with enough information to help solve any customer problems by offering the right solutions.

As we teach in our Don’t Forget the Cheese! customer service training course, it’s not the elephants and hippos that cause the most problems, it’s the little gnats that buzz around constantly giving you fits.

That’s why it’s important to standardize your customer service delivery experience. If you’re like most FBO owners and operators, you don’t tolerate mishaps on the ramp! Why, then, would you tolerate a misstep at the front counter, the very point of customer transactions?

Therefore, put it in writing and make sure every employee receives the proper training required to competently represent your business interests.

So go ahead and shake up the status quo. Get your employees more involved by getting yourself more involved. Challenge your employees by developing a little pop quiz. Correct answers get some string cheese or other healthy treat. Keep them on their toes, always thinking and learning.

If you like this series, please ‘Like Us’ by clicking the icon below. Also, let us know your thoughts by e-mailing us at:

John Enticknap: jenticknap@bellsouth.net

Ron Jackson: rjacksongroup@earthlink.net

About the authors:

John Enticknap
John Enticknap founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including President of Mercury Air Centers network of 21 FBO locations. He is an ATP and CFI rated pilot with more than 7,800 flight hours and is the author of “10 Steps to Building a Profitable FBO”. John developed NATA’s acclaimed FBO Success Seminar Series and writes an industry blog for AcUKwikAlert.com titled: The FBO Connection.

Ron Jackson
Ron Jackson is Co-Founder of Aviation Business Strategies Group and President of The Jackson Group, a PR agency specializing in FBO marketing and CSR training. 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. Ron co-developed NATA’s acclaimed FBO Success Seminar Series and writes an industry blog for AcUKwikAlert.com titled: The FBO Connection.

There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things

FBO Survival Series - Survival Tip #8: Be a Savvy Business Operator

By John L. Enticknap and Ron R. Jackson, Aviation Business Strategies Group

Welcome to the next installment of our continuing AC-U-KWIK FBO Connection Series: FBO Survival. This series focuses on the various strategies and tactics needed to survive the daily rigors of running a successful FBO operation.

In the business world, everyone is paid in two coins: cash and experience.
Take the experience first, the cash will come later.
- Harold S. Greneen

In our continuing series, we are seeking to help you run your FBO more efficiently, urging you to compete while helping you understand what drives your business.

The typical FBO owner is really in a number of diverse businesses including fueling, maintenance, charter and maybe running a flight school. The savvy FBO owner should know and understand each of these business segments intimately and comprehend what drives profitability.

On the fueling side of your business, the savvy FBO owner knows to review each and every fuel invoice and compare the pricing with the fuel supplier contract. Don’t forget about the details, such as the freight rate and taxes being charged. Paying attention to these kinds of details can mean money in your pocket.

Of course tracking your cost of fuel in your tank is also important, realizing that each load has a different cost basis which will affect the margin you need to maintain. We’ve said this before, you don’t want to give it away and not maintaining a healthy margin can spell disaster.

Another area of concern should be tracking your capture rate. This is one of the most important but least recognized statistics you should monitor. For reference, the capture rate is based on the number of arriving aircraft that take fuel vs. the number that don’t. Over time, you can spot trends that may need your attention.

For instance, if you see a spike in the number of aircraft not taking fuel, you may want to examine the workings of your line service deliverables. Also, do a little on-the-ramp survey by simply asking the customer why they aren’t taking fuel. You may be surprised at the information you can collect that can help change patterns and behaviors.

Understand Your Market Share

Another statistic to track is your market share on the airport if you have one or more competing FBOs. Your airport authority should be providing you with monthly reports of fuel being sold by your competitors. If your business goes down, then you can see if the overall business is down at the airport or if your competitors are taking market share away from you. By being business-savvy in this area, you can quickly analyze the market dynamics to first spot the trend, and then develop a plan to reverse the trend.

If you are located in a metropolitan area where you are also competing against FBOs at nearby airports, then it’s important to track activity as well as fuel prices at these airports. Remember, you want to be competitive with your fuel prices, but you don’t want to participate in a pricing war. No one wins if this happens.

We have discussed in previous blogs how to evaluate contract fuel programs. One of the largest issues for FBOs is remembering that all contract fuel suppliers add a margin onto your price. The contract fuel suppliers have to cover their costs of administration and, of course, they want to make a profit. Our advice: don’t give away your contract fuel.
   
Check Your Maintenance Shop Productivity

With regards to your maintenance business, one of the main statistics you need to be aware of is the productivity of your mechanics. Look at the simple calculation of hours paid to hours billed. If your software/accounting program will not do this, then calculate it manually. A rule of thumb is your shop should be at least 80 to 85 percent productive. If you’re not doing that, then you need to find out why.

If you’re working on older aircraft, are you charging for the research for compliance with ADs, service bulletins and previous maintenance?  These are required items to complete an annual inspection or scheduled maintenance event. Yes, it can be expensive for the aircraft owner, but you, as the responsible party, are not in the business to subsidize these requirements.

Also, look at your parts profit margins. You should be averaging a 20 to 25 percent gross profit margin. Of course, the margin is not the same on all parts. High value parts are usually sold at a margin of less than 20 percent, however, lesser value items are at a higher 30 to 35 percent rate.

Have you ever had a customer bring in his own parts? If so, what do you do? Once the parts are installed by your mechanics and you sign off in the logbooks, your FBO is now responsible for the repairs and the parts. The question is, how do you defend yourself if there are problems later?

Don’t Forget the Details

Let’s look at core charges. Are you charging the customer for the high-value core fees? We see FBOs that don’t do that. You, as the FBO, have not been responsible for the condition of the removed part, why should you assume the financial risk?  Charge the customer for the core charge and when you receive the credit, issue a credit to the customer.

Another area to examine is shipping charges incurred by the FBO. For instance, on a large turbine engine overhaul done by a vendor, we’ve seen FBOs discount hefty freight bills. If customers want fast turnarounds and expect engine shipments to be expedited, then they have to pay the shipping. Not only that, all vendor-charges should be marked up by at least 15 percent to cover associated administration costs.

These are just a few of the areas that savvy FBO owners should be looking at in order to make their business more successful. At our NATA FBO Success Seminars we discuss many more of these issues and invite you to attend the next one scheduled for March, 2014. Details will be posted soon on the www.nata.aero website.

If you like this series, please ‘Like Us’ by clicking the icon below. Also, let us know your thoughts by e-mailing us at:

John Enticknap: jenticknap@bellsouth.net

Ron Jackson: rjacksongroup@earthlink.net

About the authors:

John Enticknap
John Enticknap founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including President of Mercury Air Centers network of 21 FBO locations. He is an ATP and CFI rated pilot with more than 7,800 flight hours and is the author of “10 Steps to Building a Profitable FBO”. John developed NATA’s acclaimed FBO Success Seminar Series and writes an industry blog for AcUKwikAlert.com titled: The FBO Connection.

Ron Jackson
Ron Jackson is Co-Founder of Aviation Business Strategies Group and President of The Jackson Group, a PR agency specializing in FBO marketing and CSR training. 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. Ron co-developed NATA’s acclaimed FBO Success Seminar Series and writes an industry blog for AcUKwikAlert.com titled: The FBO Connection.

There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things

FBO Survival Series - Survival Tip #7: Ask the Tough Questions!

By John L. Enticknap and Ron R. Jackson, Aviation Business Strategies Group

Welcome to the next installment of our continuing AC-U-KWIK FBO Connection Series: FBO Survival. This series focuses on the various strategies and tactics needed to survive the daily rigors of running a successful FBO operation.

Col. Nathan Jessup: “You want Answers?”
Lt. Daniel Kaffee: “I want the Truth.”
Col. Jessup: “You can’t handle the truth!”
- A Few Good Men

Most FBO owners and operators who we come across think they are doing a pretty good job of running their operations. They’ve been in business for a relatively long time, survived the economic downturn, and managed to make a profit, sometimes a pretty slim profit, but they’re keeping their heads above water.

However, most can’t answer these three questions: Do you know what your customers think of the way you run your business? Have you ever asked them directly? Have you ever asked them the really tough question as they pay their bill and are walking out the door?

And what is the really tough question, you ask?

Answer: Would you recommend our FBO?

We all know corporate pilots, our main customers, are a rather tight-knit group. They are professionals who have earned their position over time. It’s true that some pilots are easier to please than others. Pilots are also held to a higher standard by their customers, the men and women who fly in the cabin and ultimately pay their salary.

You’re Only as Good as Your Last…

There’s an old saying among veteran pilots: “You’re as good as your last flight.” That’s because their customers have short memories regarding past flight performances when the flight they are on turns sour.

This is also true in the FBO business. Pilots are always judging us. It doesn’t really matter if they had a good experience the last time they visited. Although, the really loyal customers may cut us some slack, at least once.

Pilots are keeping a mental score of our service from the moment they’re greeted on the ramp to the moment they board their aircraft to leave.

As we teach in our acclaimed Don’t Forget the Cheese!© customer service training course, FBOs should measure their service against their own set of service standards, and remind themselves:

You’re only as good as
-your last fueling
-your last quick turn
-your last marshalling job
-your last lavatory service
-your last catering or galley service
-your clean restrooms
-your friendly and personable customer service
-your directions to a restaurant
-your recommendation on a hotel
-your clean and orderly appearance

The trouble is that most pilots won’t tell you if they’ve had a good or bad experience during their visit, unless you do something drastic, such as hit their aircraft.

Instead, they’ll leave and may never come back. Even worse, they’ll leave and tell every other pilot they know about their bad experience. And with social media, the message is literally instantaneous. There’s truth in the saying that good news travels fast, but bad news travels even faster.

Ask the Tough Question

So how do you know if you’ve scored high or stubbed your toe along the way? Simple, before the customer leaves the building, you, or someone on your staff, should approach the customer and say “Thank you, Mr. Jones, for your business. We hope you had a pleasant experience. Can you please tell me, would you recommend us?”

Most business owners are afraid to ask this question because, deep down, they’re afraid of the answer. They literally can’t handle the truth. That’s human nature. No one wants to hear something negative about their pride and joy.

However, listening to criticism is the only way to find out what part of your business needs improvement. It’s the only way to grow.
If the customer does not hesitate and readily states that yes, they would recommend you, then you can give high-fives to everyone on your staff. However, if there is the slightest bit of hesitation, you should probe further and ask, “Was there something in your service experience that we could have done better?”

Now you’ve averted disaster. You listen empathetically, apologize, and make assurances that the problem will be corrected. You invite the customer back for another chance. You also need to follow-up with the customer by sending a hand-written note, giving the customer a call, or better yet, doing both. This is all part of the information we cover during one of our NATA FBO Success Seminar sessions on Being the Restaurant Owner.

If you like this series, please ‘Like Us’ by clicking the icon below. Also, let us know your thoughts by e-mailing us at:

John Enticknap: jenticknap@bellsouth.net

Ron Jackson: rjacksongroup@earthlink.net

About the authors:

John Enticknap
John Enticknap founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including President of Mercury Air Centers network of 21 FBO locations. He is an ATP and CFI rated pilot with more than 7,800 flight hours and is the author of “10 Steps to Building a Profitable FBO”. John developed NATA’s acclaimed FBO Success Seminar Series and writes an industry blog for AcUKwikAlert.com titled: The FBO Connection.

Ron Jackson
Ron Jackson is Co-Founder of Aviation Business Strategies Group and President of The Jackson Group, a PR agency specializing in FBO marketing and CSR training. 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. Ron co-developed NATA’s acclaimed FBO Success Seminar Series and writes an industry blog for AcUKwikAlert.com titled: The FBO Connection.

There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things

FBO Survival Series - Survival Tip #6: Take Off the Blinders

By John L. Enticknap and Ron R. Jackson, Aviation Business Strategies Group

Welcome to the sixth installment of our continuing AC-U-KWIK FBO Connection Series: FBO Survival. This series focuses on the various strategies and tactics needed to survive the daily rigors of running a successful FBO operation.

“But if you are going to wear blinders then you do not know the world.”
-Miriam Makeba

We’re all guilty of doing it. We get so busy, and maybe a little complacent, and forget to take the blinders off in order to see and experience our FBO from the customer’s perspective.

At our NATA FBO Success Seminar, we discuss “Management by Walking Around.” This involves getting out of the office and observing the workings of your FBO — while wearing the hat of the customer. It’s like being a restaurant owner and making sure the operation is running smoothly.

Not long ago we were on a commercial flight and in the seat next to us was a pilot for one of the leading aircraft fractional providers. So, we took advantage of the situation and began asking some questions about the level of service he was looking for in an FBO. He started by telling us some of the things he observed while taxiing onto the ramp of an FBO for the first time.

“I can always tell if I’m going to get good customer service by the way I’m greeted on the ramp by the line service personnel,” he began. “If I don’t see a line service technician guiding me into a parking spot with crisp and proper hand signals, then I know we’re in for less than good time.”

“Then I look at how clean the ramp looks. Is the ground equipment looking good, parked with chocks under the wheels, traffic cones placed around parked aircraft?” the pilot asked. “If so, then I know this FBO is following good operating procedures.”

He said that if he is disappointed with his arrival, then he knows he’ll be disappointed with the rest of the service experience.

We could tell this pilot knew his stuff and was anxious to tell us more. So, we probed a little further.

“If the APU is filthy dirty, I wonder what the bathrooms look like,” he said, poking his hand into the seat pocket in front of him. “The same way with an aircraft, if you see a bunch of stuff sticking out this seat pocket that doesn’t belong here, don’t you sort of wonder what kind of maintenance the aircraft gets?”

He made some good points and we were readily taking mental notes to share in our seminars.

All of this begs the question: When was the last time you got out of your office and walked around the facility and out onto on the ramp?

Observe from a Pilot’s Perspective

Why not look at your business the same way a customer would?  Walk all the way out to the entrance to your ramp and observe the view pilots have of your FBO. Can you see what the pilots see? Is the first impression what you want?

Do you observe a clean well organized ramp, equipment parked and looking good with safety cones in place? How about your fuel trucks parked in a line in accordance to NFPA 407?

Or do you see grass growing out of the tarmac, equipment that needed a paint job 10-years-ago, fuel trucks that are leaking and/or have the seats blown out and perhaps disorganized aircraft parking?
Here is a little check list we encourage you to post in your FBO:

AIRCRAFT ARRIVALS

»  HEARING PROTECTION
»  MARSHALER POSTED
»  WANDS ON ARRIVAL
»  CORRECT GUIDE SIGNALS
»  CHOCKED BOTH MAINS
»  CARPET ON HAND
»  CONES ON THREE POINTS
»  NIGHT WANDS USED WHEN APPROPRATE
»  RAMP LIGHTING WORKING AND IN GOOD REPAIR

AIRCRAFT DEPARTURES

»  HEARING PROTECTION
»  REMOVAL OF CARPET
»  WANDS ON DEPARTURE
»  GPU OPS/SIGNALS
»  CORRECT GUIDE SIGNALS
»  NIGHT WANDS USED WHEN APPROPRIATE

PARKED AIRCRAFT

»  CHOCKED BOTH MAIN LANDING GEAR
»  CONES FOR VEHICLES
»  TRAFFIC CONES ON 3 POINTS/TAIL AND WINGS
»  TIEDOWN ROPE CONDITION
»  TIEDOWN ROPE LOG

What else can you do while you’re walking around your FBO?  How about greeting your employees, engaging them in conversation, getting to know them and praising them for doing a good job? Human factors research indicates that what employees want most is recognition for doing a good job. Helping people reach their full potential will allow your business to succeed.

And this is just the start of “Managing by Walking Around.” You’d be surprised what else you can become engaged in when you take off the blinders!

If you like this series, please ‘Like Us’ by clicking the icon below. Also, let us know your thoughts by e-mailing us at:

John Enticknap: jenticknap@bellsouth.net

Ron Jackson: rjacksongroup@earthlink.net

About the authors:

John Enticknap
John Enticknap founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including President of Mercury Air Centers network of 21 FBO locations. He is an ATP and CFI rated pilot with more than 7,800 flight hours and is the author of “10 Steps to Building a Profitable FBO”. John developed NATA’s acclaimed FBO Success Seminar Series and writes an industry blog for AcUKwikAlert.com titled: The FBO Connection.

Ron Jackson
Ron Jackson is Co-Founder of Aviation Business Strategies Group and President of The Jackson Group, a PR agency specializing in FBO marketing and CSR training. 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. Ron co-developed NATA’s acclaimed FBO Success Seminar Series and writes an industry blog for AcUKwikAlert.com titled: The FBO Connection.

There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things

FBO Survival Series - Survival Tip #5: Prepare and Adapt to the New Normal

By John L. Enticknap and Ron R. Jackson, Aviation Business Strategies Group

Welcome to the fifth installment of our continuing AC-U-KWIK FBO Connection Series: FBO Survival. This series focuses on the various strategies and tactics needed to survive the daily rigors of running a successful FBO operation

“Expect the best, plan for the worst, and be prepared to be surprised.”
-Denis Waitley

Last January we published our FBO Industry Outlook for 2013. Basically, we said FBOs will compete on customer service and not price as they try to hold their margins and squeeze out a modest growth of 4 to 6 percent.

Now that we’ve put the first two quarters behind us, nothing has really happened to temper our economic outlook. That’s because we’ve seen more of the same.

• Oil Prices have remained very volatile.
• Business aircraft sales on a slow recovery.
• Business aircraft traffic counts for the first six months of 2013 are down 2 percent from last year.
• Political gridlock continues.
• Unemployment continues to be well above normal levels.
• Healthcare costs will rise—Obamacare implementation continues to be uncertain.
• The Gross Domestic Product (GDP) in the United States expanded 1.70 percent in the second quarter of 2013 over the previous quarter as reported by the Bureau of Economic Analysis. GNP Annual Growth Rate is up 1.4 percent from the previous 1.3 percent.
• The U.S. Consumer Confidence Declines in July. The Conference Board index decreased to 80.3 in July from 82.1 in June. The Present Situation Index increased to 73.6 from 68.7. The Expectations index decreased to 84.7 from 91.1 last month

What this shows is we are now operating in a new normal. In other words, forget the way the FBO business operated in past years. The playing field has changed. Like it or not, we have to adapt and change the way we do business. Otherwise, survival will be difficult.

Operating in a New Normal

The new normal really started taking shape in 2008 when the economy began to put on the brakes. You did what you had to do to survive. You began operating smarter. Perhaps you looked to cut labor costs by outsourcing some of the things you did for customers, such as detail and cleaning aircraft as well complimentary auto washing.

Other FBOs cross trained their employees to do various jobs. This way an FBO did not have to layoff skilled and long-term employees as jobs were filled when normal attrition thinned ranks.

You no doubt took a hard look at your purchasing behavior and kept expenses in check in order to create positive cash flow.

In reality, the things you were forced to do created your own new benchmark for how you should operate in the foreseeable future. This now has become your new normal.

Industry wise, there is very little on the horizon that would induce a robust return to pre-2008 business levels. Add to this the fact that aircraft operators have become smarter during the downturn by operating more efficiently through tighter scheduling, negotiating fuel purchases, tankering fuel from their home base and purchasing more fuel efficient aircraft.

Moving Forward

As we move forward, here are a few things FBOs can do to protect their current situation and be positioned for potential future growth.

• Pay your bills according to terms. Use the 30 day windows most creditors allow.
• Use the credit card that gives you points or cash back, and then pay on time.
• Use a bonded and stable payroll processing firm to pay employees. They know tax issues.
• Receive payments promptly. Fuel suppliers should pay within 24 hours.
• Get paid immediately by contract fuel suppliers and credit card processors.
• Cash is king. Maintain positive flow and maximize cash on hand. Don’t pay excessive interest rates or fees. Work with your banker to get a line of credit and do cash forecasts.
• Have a good insurance story and let your broker be your friend. They have resources to help with safety training and audits
• Do a business analysis prior to making decisions on expenditures.

And always remember to maintain a healthy fuel margin. We know a $2 margin is hard hold but if you are competing on customer service and not price, you will find that customers will remain loyal, are less likely to ask for deep discounts, and will recommend you to others.

So, be prepared and adapt. The new normal may be here to stay!

If you like this series, please ‘Like Us’ by clicking the icon below. Also, let us know your thoughts by e-mailing us at:

John Enticknap: jenticknap@bellsouth.net

Ron Jackson: rjacksongroup@earthlink.net

About the authors:

John Enticknap
John Enticknap founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including President of Mercury Air Centers network of 21 FBO locations. He is an ATP and CFI rated pilot with more than 7,800 flight hours and is the author of “10 Steps to Building a Profitable FBO”. John developed NATA’s acclaimed FBO Success Seminar Series and writes an industry blog for AcUKwikAlert.com titled: The FBO Connection.

Ron Jackson
Ron Jackson is Co-Founder of Aviation Business Strategies Group and President of The Jackson Group, a PR agency specializing in FBO marketing and CSR training. 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. Ron co-developed NATA’s acclaimed FBO Success Seminar Series and writes an industry blog for AcUKwikAlert.com titled: The FBO Connection.

There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things

FBO Survival Series - Survival Tip #4: Develop an Early Warning System

By Ron Jackson and John Enticknap, Aviation Business Strategies Group

Welcome to the fourth installment of our continuing AC-U-KWIK FBO Connection Series: FBO Survival. This series focuses on the various strategies and tactics needed to survive the daily rigors of running a successful FBO operation.


“History is a vast early warning system.”
-Norman Cousins

In developing operational strategies for our FBO clients, one of the first questions we ask is if they have in place a daily, weekly and monthly reporting system that shows at-a-glance critical metrics of their business?

It’s a type of early warning system that helps FBO owners and managers run a more efficient and profitable operation.

Many of you may recall the Distance Early Warning (DEW) radar system implemented by the U.S. during the early years of the Cold War with Russia. Part of the Semi-Automatic Ground Environment (SAGE) program, it included a radar net that stretched across the Northern boundaries of Alaska to detect, track and help destroy enemy aircraft.

Ronald Enticknap, John’s father, helped develop this system while being assigned to the U.S. Department of Defense by Great Britain’s Royal Air Force.

Just like the SAGE system, the metrics displayed in an FBO early warning system, commonly referred to as dashboard reports, can be used as an early warning system to flag unusual sales activities and spot trends that could indicate something is amiss in an FBO operation.

Dashboard Metrics

Properly integrated into an FBO’s management process, an early warning system will act as a business barometer to help set in motion a get-well program to maintain profitability goals.
The basic metrics a dashboard report should include are:

• Daily, monthly, & YTD fuel sales
• Ongoing margin analysis
• Maintenance labor productivity
• Charter aircraft productivity

To give you an idea of how effective these reports can be, we recently corresponded with one of our clients who spotted a disturbing trend in their fuel margins that resulted in loss of revenue.

Case Study

This client had been monitoring their margins. They noticed their contract fuel prices, based on their margin, seemed to be in-line with other FBO’s including their main competitor. Contract fuel mark-up, on average, ran 8 cents to 12 cents per gallon, which was fine with them.

However, about six months prior they noticed the price to customers started increasing quite drastically and wound-up being 20 cents to 30 cents a gallon more than it had been (adjusted for PLATTS fluctuations). During this time, the client did not increase their margin. They then asked several contract fuel suppliers if they had changed something and the answer was no. They then asked their fuel supplier the same thing and their answer was no as well.

Upon further investigation, the client discovered their fuel supplier uses a different benchmark for Into-Plane pricing–ARGUS (not PLATTS). In their analysis, they put together a comparison between PLATTS and ARGUS Jet-A numbers. For the past 18 months, ARGUS was shy of a penny more; however, since early this year, ARGUS seemed to be 4 cents to 10 cents higher than PLATTS.

The client dug even deeper and discovered the fuel supplier had a “glitch” in their system and the mark-up was actually 15 cents, not 10 cents as previously thought.

While many FBOs go through their fuel provider for contract fuel, our client decided to change and elected to go direct with the major providers. The terms were not that different from their fuel supplier, but it put our client more in-line with their competitor and saves them from having to cut their margin. Now, they are actually trying to increase their margins.

Our client said it was time consuming to go through this process, but without having an early warning system in place, it may have gone undetected.

To summarize, it’s important to build flexibility into your business. The competitive nature of our industry is always there, not to mention the FBO business model of the past 50 or more years is changing. Today, there is more squeezing of fuel margins; competing on multiple bids for maintenance work; aggressive pricing on charter trips; and more pressure on costs which keep FBO owners and managers very busy trying to turn a profit.

Tactics: Re-think long-term dealings:

• Do no more than three-year contracts on fuel supply
• No more than one year on hangar lease agreements
• Put fuel uplift agreements in writing to maintain margins
• For fuel discount programs, let’s evaluate every three months
• Review maintenance discounts

We are operating in a new environment, but remember there have always been business cycles. Operating your business prudently and with good planning will keep you in the game for a long time.

If you like this series, please ‘Like Us’ by clicking the icon below. Also, let us know your thoughts by e-mailing us at:

John Enticknap: jenticknap@bellsouth.net

Ron Jackson: rjacksongroup@earthlink.net

About the authors:

Ron Jackson
Ron Jackson is Co-Founder of Aviation Business Strategies Group and President of The Jackson Group, a PR agency specializing in FBO marketing and CSR training. 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. Ron co-developed NATA’s acclaimed FBO Success Seminar Series and writes an industry blog for AcUKwikAlert.com titled: The FBO Connection. 

John Enticknap
John Enticknap founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including President of Mercury Air Centers network of 21 FBO locations. He is an ATP and CFI rated pilot with more than 7,800 flight hours and is the author of “10 Steps to Building a Profitable FBO”. John developed NATA’s acclaimed FBO Success Seminar Series and writes an industry blog for AcUKwikAlert.com titled: The FBO Connection.

There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things

New Series: FBO Survival - Survival Tip #3: Don't Give it Away!

By Ron Jackson and John Enticknap, Aviation Business Strategies Group

Welcome to the third installment of our continuing AC-U-KWIK FBO Connection Series: FBO Survival. This series focuses on the various strategies and tactics needed to survive the daily rigors of running a successful FBO operation.

"Your success in life isn't based on your ability to simply change. It is based on your ability to change faster than your competition, customers and business." — Mark Sanborn

For many years, FBOs in the United States have been operated with a simple formula: markup fuel to cover all the operational business expenses. The greater the margin, the better the profit!

When fuel prices were fairly stable and the old inefficient heavy iron aircraft were commonly seen on ramps, this worked out pretty good.

But as singer- songwriter Bob Dylan so poignantly penned, “The Times They are a Changin’”.

From the last quarter of 2008 we’ve seen some real changes in our industry including the political bashing of our industry and a prolonged recession. As we struggled through 2009, we saw the ‘average’ FBO experiencing a 20 to 25 percent drop in business sales – with some losing more than 50 percent of their fuel sales. In 2010/2011 there was some recovery with an encouraging increase in charter activity and the resulting increased fuel sales.

Now in 2013, we are struggling with continuing volatile fuel costs. At the beginning of the year the Gulf Coast Jet A fuel prices ran up to $3.24 per gallon; now they’re down to $2.74 per gallon. That’s a .50 cent swing! Did your posted prices swing .50 cents a gallon?

We are still experiencing more unfortunate politics conveying a negative image for business aviation. And we are seeing the restart of the continued consolidation of the FBO industry – including FBOs that fail. Most of all, FBOs are continuing to experience competitive pressure on fuel margins to include all stakeholders such as customers, contract fuel suppliers and large volume users. Just read about a couple of the large chain operators and the largest corporate aircraft operator in the world – they’re in a dispute over discounts being extended to more corporate aircraft operators.

Changes in Operator Fuel Purchasing Habits

Over the last few years we have seen a strong push from our corporate customers utilizing alternate fuel purchasing strategies, rather than the traditional retail fuel purchase. Of course, the full retail fuel purchase has always been a myth – purchasers of Jet A fuel expect and get discounts off the posted price.

The trend over the last 15 years, especially within the last few, is to pre-negotiate fuel purchasing with many of the contract fuel sellers prior to arriving at your FBO. Calling ahead for the best discount available or changing plans to get the best overall operating costs are all tactics for reduced fuel costs and gallons purchased. This is savvy cost control for corporate operators.

Add to this the fact that corporate aircraft operators are getting more sophisticated in their flight planning:

• Using fuel tankering models
• Pre-established fueling points
• Better ATC routing for weather and flight planning to minimize fuel costs
• The purchase of more fuel-efficient aircraft

FBO Profit Misconceptions

Today’s FBO business model has not changed much over the last 30 years. It is still highly dependent on the retail fuel sale. The successful FBO’s look for the fuel sales – be it retail, contract or other – to essentially support the entire FBO operation.

But do all the aircraft that taxi onto an FBO ramp purchase fuel? No, they don’t. Yet the cost of doing business goes on, including exposing your FBO to potential insurance claims should the customer’s aircraft get mishandled. This has given rise to the Ramp Fee which is still a controversial subject in some aircraft operator’s minds.

Again, there is a misconception by many in the aviation business that FBO’s are super high profitable organizations and, quote: “ripping off” the flying public. This, of course, is highly exaggerated.

Changes in the Wind

However, the FBO business model in the U.S., as we know today, is destined for change. As mentioned, fuel margins are being squeezed from both ends. At one end is the volatile cost of fuel which drives significant base price changes. At the other end is the more savvy aircraft operator trying to drive down the sale price. In the middle is your margin, being squeezed like a lemon in a juice press.

So, how do we make lemonade out of the tart extracted juice? Here are few observations to ponder …

Having operated FBOs in both the U.S. and in the Middle East, we are very familiar with the European FBO Business model where fuel is not part of the income equation. Rather, fixed base operators in this part of the world depend on revenue generated solely by fees associated with providing various services common to an FBO operation:

• Marshalling
• Handling
• Parking
• Ramp
• Ramp transportation
• Over the Road transportation
• Baggage Handling
• GPU
• Lavatory Service
• Customs/visa
• A handling fee for collecting navigation fees
• A  handling fee for collecting landing and over-flight fees
• Lounge Fees
• Catering

We are not suggesting you should follow this model, at least in its entirety. However, as margins get squeezed, you need to get creative in shoring up your bottom line by creating other streams of income.

Don’t Give it Away!

So our FBO Survival advice for this blog post is: DON’T GIVE IT AWAY!

If a customer doesn’t buy fuel, or at least doesn’t buy a minimum quantity for the type of aircraft being flown, why not charge a facility fee for use of the ramp that includes labor for safely parking and towing the aircraft, and repositioning for passenger loading?

If aircraft operators want a significant discount off the posted price, why not charge for taking out the trash, cleaning the lav, servicing the galley with ice and coffee or hooking up the APU?

If a fuel broker drives a hard bargain, why not charge for the courtesy vehicle or the newspapers? This often entails a requested set for the pilots and a set for the passengers.

If, during the course of a transaction, your fuel margin is significantly compromised in any way, why not consider an Airport Infrastructure Fee; say $18.88 per aircraft for all transient aircraft, for that clean restroom which is kept tidy by paid staff? Or how about a fee to cover the nicely furnished and well equipped conference room, pilot and customer lounges, the coffee and cookie bar which is kept well stocked throughout the day?

No, were not saying you need or want to charge for everything you do, but you need to analyze your various income streams and make sure you’re not giving your services away. Your business deserves to make a profit – and that is not a bad word! Your business should not subsidize corporate aircraft operating companies or your airport sponsor. If you do that, your business will not survive and you’ll lose your investment. Profit, it allows for growth and the continuation of your business.

If you like this series, please ‘like’ us by clicking the icon below. Also, let us know your thoughts by e-mailing us at:

John Enticknap: jenticknap@bellsouth.net

Ron Jackson: rjacksongroup@earthlink.net

About the authors:

Ron Jackson
Ron Jackson is Co-Founder of Aviation Business Strategies Group and President of The Jackson Group, a PR agency specializing in FBO marketing and CSR training. 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. Ron co-developed NATA’s acclaimed FBO Success Seminar Series and writes an industry blog for AcUKwikAlert.com titled: The FBO Connection. 

John Enticknap
John Enticknap founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including President of Mercury Air Centers network of 21 FBO locations. He is an ATP and CFI rated pilot with more than 7,800 flight hours and is the author of “10 Steps to Building a Profitable FBO”. John developed NATA’s acclaimed FBO Success Seminar Series and writes an industry blog for AcUKwikAlert.com titled: The FBO Connection.

There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things

New Series: FBO Survival - Survival Tip #2: Avoid the “Ready, Fire, Aim” FBO/MRO Syndrome

By Ron Jackson and John Enticknap, Aviation Business Strategies Group

Welcome to the second installment of our new AC-U-KWIK FBO Connection Series: FBO Survival. This series focuses on the various strategies needed to survive the daily rigors of running a successful FBO operation.

As a follow-up to our first survival tip, ‘Keep Your Customers Close…and Your Margins Closer’, let’s examine a syndrome that has been occurring with FBOs that also run an MRO business.

It’s called the “Ready, Fire, Aim” syndrome. It affects FBOs and MROs and its symptoms are:

•   Lack of communication between the ‘business end’ and the ‘factory’
•   Job bidding that has no ‘real cost’ basis
•   Over-promising and under-delivering
•   A slow but sure drag on bottom-line results

Lack of Communication

Often times, MROs are primarily focused on keeping the factory busy. By factory, we mean the direct labor side of the business. All the technicians, inspectors and supervisors whose responsibility it is to inspect, modify and fix a customer’s aircraft.

However, the indirect labor, or the business side, is often guilty of not managing the workflow properly - which is the acquiring, scheduling and managing of aircraft that come into the factory. This mismanagement often results in extreme highs and lows in terms of work cycle.

Thus, it’s often “Ready, Fire, Aim”. It’s a lack of communication between the business side and the factory. It’s a perfect example of the right hand not knowing what the left is doing.

Inefficient Job Bidding

Another symptom is job bidding that has no real cost basis. This action typically results in underbidding a job. We find many MROs don’t really know the true cost of labor when developing a bid.

Every FBO and MRO should have an idea of what their actual cost is for an hour of labor. Whether you’re pumping a gallon of Jet A or turning a wrench on a Hawker, you should have a total grasp on what the actual cost is for each hour of service expended.

As we all know, it’s not just the cost of hourly wages or salary we pay our team members. Also, we have to include the mandatory taxes, social security, FUI, SUI and possible state taxes. In addition, we have to figure in optional benefits. Medical plans and other employee benefits also must be included. This can be 25 to 35 percent of the base wage.

Many firms stop there! What about your overhead costs? You should collect the information on your basic overhead costs such as:

•   Rent
•   Utilities
•   Communications
•   Workers Compensation
•   Insurance

We have talked to many medium sized FBOs who have told us their insurance is $1,000 per day! So these values become part of your labor cost.

As an example, if you pay an employee $15 an hour you need to add $5 for taxes and medical. When you add another $7 for overhead you have a real labor cost of $27 per hour. For a technician, you can have a labor cost of more than $40 per hour with a basic hourly wage rate of $25.

Once this is done, then you have to add extra to cover administrate overhead, sales costs, unproductive labor cost, overwork on jobs, the “free stuff” you give away, advertising costs, contingencies for insurance deductibles, etc.

Then you need to add a reasonable percentage in order to make a profit. Why else are you in business? As we often teach in our NATA FBO Success Seminars, we love the aviation business, but you can’t give it away. We’re not in this business for a hobby.

Dashboard Reports

Rely on your Dashboard Report. You should have a system in place that produces a reliable Dashboard Report. Here is a brief explanation of what they are, and how you should use them.

There you are, flying or driving along and you take a look at your dashboard. What does it tell you? In one quick glance you can tell your speed, direction, condition of your engine and the amount of fuel that remains.

The same goes for when you want to check on the condition of your company. You need a daily report – a Dashboard Report – that tells you what is happening with your business. You need to know:

•   How much fuel you pumped the day before
•   How much you pumped for the month to date
•   Value of the parts sold
•   Value of the work orders billed
•   Charter hours sold and dollar amount
•   Other sales information

This information tells you how you’re doing and you can compare the information to your budget. You did do a budget … right?

Collect this information from your accounting system or develop your own report.

Over-Promising and Under-Delivering

Often, the result of the first two parts of this syndrome is promising the customer something your FBO/MRO can’t deliver. Whether it’s when you can deliver an aircraft, the true cost of the job or both.

Yes, there are a lot of factors that can disrupt the delivery cycle including unforeseen extra work that needs to be done to the aircraft. However, by being positioned as a partner and communicating with your customer on a regular basis, many cost over-runs and delays can be mutually worked out.

What you don’t want to do is surprise your customer by underbidding and over-promising on delivery times. If you are pro-active with your customer from the start, you stand a better chance of getting a good recommendation and ultimately a loyal, satisfied customer.

Drag on the Bottom Line

Needless to say, lack of communication, inefficient bidding and over-promising can be devastating to your bottom line. The FBO/MRO business is challenging enough. Margins are extremely thin in this business and anything an owner/operator can do to create more efficiency and value in an operation has a positive impact on the bottom line.

Before you start a new job, get with your factory in order to properly schedule the work. Make sure they are comfortable with the terms of your proposal. Then, calculate your true costs before you add in your profit margin - and remember to keep your customers close.

If you like this article, please click on the “Like” icon below. Also, if there is a comment you’d like to make, please email us at:

John Enticknap: jenticknap@bellsouth.net

Ron Jackson: rjacksongroup@earthlink.net

About the authors:

Ron Jackson
Ron Jackson is Co-Founder of Aviation Business Strategies Group and President of The Jackson Group, a PR agency specializing in FBO marketing and CSR training. 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. Ron co-developed NATA’s acclaimed FBO Success Seminar Series and writes an industry blog for AcUKwikAlert.com titled: The FBO Connection. 

John Enticknap
John Enticknap founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including President of Mercury Air Centers network of 21 FBO locations. He is an ATP and CFI rated pilot with more than 7,800 flight hours and is the author of “10 Steps to Building a Profitable FBO”. John developed NATA’s acclaimed FBO Success Seminar Series and writes an industry blog for AcUKwikAlert.com titled: The FBO Connection.

There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things

New Series: FBO Survival - Survival Tip #1: Keep Your Customers Close...and Your Margins Closer

By Ron Jackson and John Enticknap, Aviation Business Strategies Group

Welcome to the first installment of our new AC-U-KWIK FBO Connection Series: FBO Survival. This series will focus on the various strategies and tactics needed to survive the daily rigors of running a successful FBO operation.

Our first survivor tip, ‘Keep Your Customers Close … and Your Margins Closer’, is inspired by dialogue in the film, The Godfather: Part II. It means, in order to survive today’s economic FBO climate, you need to focus on your two most important revenue generators: your valued customers and your fuel margins.

Keep Your Customers Close

At the beginning of 2013, we made our yearly FBO Industry Business Forecast by issuing a news release at the Annual NBAA Scheduler’s and Dispatchers (S&D) show and convention in San Antonio. The headline read: FBOs to Compete on Service, Not Price in 2013.

To recap, FBOs which compete on price will find it difficult to carve out a true Unique Value Proposition (UVP) in today’s competitive environment. Competing on price accomplishes two things - both negative:

1. It attracts the bottom feeders. This type of customer is only interested in the best price on any particular day and they often flit from one FBO to another in their quest. They are not ‘loyal customers’ and are often the ones who complain the most.
2. You compromise your fuel margins. Not only are you practically giving away your fuel, you’re setting yourself up for fiscal ruin. We’ll discuss this topic more in this blog.

When you compete on a customer service level, you start to create value for your own brand. You establish a UVP. Customers begin to take note and over time, become loyal.

Loyal customers complain less. They tend to pay a reasonable price in return for a good customer service experience. And, more importantly, they like your brand and are willing to recommend your FBO.

These are the types of customers you want to hold close, making sure everything goes well during their customer service experience. A repeat, loyal customer is more valuable than trying to go after a new customer based on price.  And, when they are willing to recommend your FBO to other pilots and flight departments, there is only one word for this … priceless!

Therefore,  train your employees in the art of delivering unique customer service, like the one we subscribe to at Aviation Business Strategies Group called, Don’t Forget the Cheese!©.

And above all, keep your customers close by building long-term relationships at all levels of your organization. Be the restaurant owner and lead by example. Create a working climate where every employee is customer service oriented. Let the customers know you appreciate their business.

Amazingly, only one in 25 customers will ever tell you there is a problem, so empower your employees to ensure any dispute is taken care of at the time of transaction. Up to 95 percent of disgruntled customers will return if disputes are handled in a timely fashion.

Keep Your Margins Closer

When we say ‘keep your margins closer’ we are recommending that you protect your fuel margins in order to survive. Often FBOs are under stress by customers, third party fuel providers, etc. to cut fuel prices thus eating into your fuel margins and your potential profit.

At our industry acclaimed FBO Success Seminar we conduct for the National Aviation Transportation Association (NATA), we have a session called ‘Seeking a Silver Bullet’ where we discuss maintaining healthy but fair fuel margins. Like the Lone Ranger, we are all seeking a silver bullet solution. Question is, does it exist?

Often times we run across FBOs that don’t really know what their actual operating costs are - which causes their fuel prices to be set arbitrarily. When your fuel truck hooks up to a customer’s aircraft, each gallon of fuel pumped should be priced to not only cover your set costs, but also yield a reasonable profit.

Therefore, you should have at least three desires or goals in mind when you set fuel prices:

1. Be competitive within your marketplace
2. Make a reasonable gross profit
3. Retain customers

In order to reach these goals, we should understand the relationship between price and cost:

• The obvious -prices must exceed costs or we will ultimately fail
• Costs include all the normal items such as leases, equipment, labor, training, loan repayments, etc.
• But don’t forget to add costs of mark downs, shortages, discounts, marketing, overhead, etc.
• Treat profit as part of your costs - we don’t want to be in business for a hobby!

Now, let’s look at a real world pricing evaluation for pumping a gallon of JET A at our fantasy facility – we’ll call Ron/John’s FBO:

Cost of Jet A Platts 2/12 thru 2/18/2013:
LAPM                   3.3876
Differential                .15
Fed Tax                   .244
Lust                        .005
Flowage                    .10
Transportation          .06

Total Cost of Jet A $3.9466/gal.

However, the above cost of fuel does not include our operating costs.

What does it really cost to pump a gallon of fuel? Here are our example numbers for Ron/John’s FBO:

• FBO X Pumps     584,910 gallons per year
• Annual revenue     $2,278,000
• Cost of Sales           1,665,000
• Expenses                   409,904
• Net Profit                    203,000

Therefore, under this scenario, the cost to pump a gallon of fuel is $0.7007/gallon.

Now let’s take a look at True Cost Evaluation:

• Cost of Fuel               $3.9466
• Cost to Pump             $0.7007

      Total Cost per Gallon     $4.6473

In order to determine what your actual posted price should be, there are several cost pricing models to consider including, cost plus pricing, mark-up pricing, demand pricing and competitive pricing. At our NATA FBO Success Seminar we discuss each of these methods in detail. However, for this blog, let’s just keep it simple.

Think of a flat added-on margin of $2.00. It used to be $1.00, but we all know what time and inflation has done to our economy.

• For every gallon of fuel sold, you should have a goal of a $2.00 plus gross margin.

Sell a gallon - $2.00 in the bank!

• Conversely, think for every $2.00 in expenses; labor, cookies, papers, coffee, etc. you need to sell a gallon of fuel - $2.00 plus out of the bank!
• Therefore, our Ron/John's FBO example sale price would be $6.65/gal.
• Guess what the chain FBO’s are charging?

Earlier we talked about ‘Seeking a Silver Bullet Solution’? The solution is KNOWLEDGE. Therefore, in order to Keep Your Margins Closer, we should take into consideration the following:

• All prices must cover costs and profits
• The most effective way to lower prices is to lower costs
• Review prices frequently to assure that they reflect the dynamics of cost, market demand, response to the competition and profit objectives
• Prices must be established to assure sales, but don’t give it away

And lastly, remember to add value to your fuel transactions by providing the best customer service, and don’t just drop the price. Keep your customers close, and your margins closer. That’s our FBO Survival tip No. 1.

Let us know what you think about our comments on FBO Survival!

John Enticknap: jenticknap@bellsouth.net

Ron Jackson: rjacksongroup@earthlink.net

About the authors:

Ron Jackson
Ron Jackson is Co-Founder of Aviation Business Strategies Group and President of The Jackson Group, a PR agency specializing in FBO marketing and CSR training. 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. Ron co-developed NATA’s acclaimed FBO Success Seminar Series and writes an industry blog for AcUKwikAlert.com titled: The FBO Connection. 

John Enticknap
John Enticknap founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including President of Mercury Air Centers network of 21 FBO locations. He is an ATP and CFI rated pilot with more than 7,800 flight hours and is the author of “10 Steps to Building a Profitable FBO”. John developed NATA’s acclaimed FBO Success Seminar Series and writes an industry blog for AcUKwikAlert.com titled: The FBO Connection.

There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things