FBO Tip of the Week: How to Measure Your Customer Service Performance

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

There are many line items you can measure in an FBO operation in order to assess how your business is trending. By setting simple benchmarks for tangibles such as fuel sales, fuel margins and maintenance productivity, you can set up an electronic dashboard for daily monitoring. (See our previous post: FBO Tip of the Week: Keep Your FBO Operations Simple.)

However, how do you measure an intangible like your customer service performance?

The obvious answer is to initiate a customer service survey. But not all surveys will help you benchmark your performance and, perhaps more importantly, ask the right questions.

As part of our Don’t Forget the Cheese customer service training program, we recommend FBOs initiate a measurable customer service survey using the following criteria.

• Keep the survey short. Ask the customer to rate no more than five service areas or attributes. It’s our experience that pilots will more likely respond to surveys that appear short and easy to complete.
• Rate each service area or attribute from one to 10 with 10 being the highest.
• We suggest customers evaluate the following:
  • Line Service
  • Customer Service
  • Passenger Amenities
  • Pilot Amenities
  • Cleanliness of Facility
• Also ask just one really tough question: Would you recommend us? Yes or no?

We advocate you place a value of 50 points on this question alone. Why, you ask? Simply, a customer recommendation should not be taken lightly, and for most customers, this means they are putting their reputation on the line. Also, if a customer says, “No,” to this question, you should find out why. This will help correct a potentially negative situation and assist in repairing a valued customer relationship.

Now, when you receive a completed survey, add up your points. The perfect score is 100.

For convenience, we recommend placing this survey on your Web site. We also suggest you include a printed survey with your fuel invoice and place a completed survey box/receptacle next to the facility door leading to the ramp.

If you want to benchmark your progress, do a monthly tabulation. Also, you may want to establish an historic benchmark by inviting past customers to take the survey.

Besides the obvious benefit of finding out what customers think, a customer service survey also sends a positive message to your employees that customer service is important. Therefore, make sure your employees take part in this program, and always provide them with survey results.

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.

FBO Connection Featured in B&CA Digest

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

 
We would like to welcome B&CA Digest readers to our blog, FBO Connection. Since our first blog post in 2011, the FBO Connection has been a source for discussion, ideas and general conversation on the FBO industry where you’ll find regular contributions from seasoned FBO professionals sprinkled with bits of wisdom and peppered occasionally with some hot topics. We like to call it “Sage Advice for the FBO Community.”

The content of the FBO Connection varies with each post and is written as a source of information for not only owners, operators, managers and supervisors but also for practically any FBO employee. In fact, we’ve received feedback from FBO operators who say they print our blogs and post them in the FBO for all employees to read. “It’s like taking a course in how to run a more successful FBO operation,” one regular reader commented.

With each blog post, we’ll peel back the onion to reveal what we consider to be seasoned FBO insider knowledge. Many topics fall out of our proprietary 10 Steps to Building a Profitable FBO, which forms the basis for our NATA FBO Success Seminar.

Included will be winning strategies and tactics you can put to use immediately and, over time, in the operation of your FBO. Subjects range from leases, minimum standards, reducing your cost of business and operating more efficiently to managing your fuel pricing/margins, finding “free money” hidden in your operation and competing on customer service, not price.

As we prepare for 2015, we’ll be busy blogging about upcoming events that affect the FBO industry. Here is a rundown on some of our forthcoming activities and educational opportunities:

• Jan. 15: Our Annual FBO Industry Survey and Forecast. Each January we conduct a survey of more than 500 U.S.-based FBOs to determine the overall health and direction of the FBO industry. With this information, we write a report and issue a news release stating our findings while providing a forecast for the coming year.
• Feb. 3: NBAA Schedulers & Dispatchers Conference, San Jose, Calif. Join us at 5:15 p.m. in the Conference Hall as we conduct the Pre-Conference Exhibitor Meeting. Here we’ll discuss how to get the most out of your booth presence at the S&D conference and why “adding a little cheese” can enhance your exhibit investment.
• March 9-10: NATA FBO Success Seminar, Las Vegas. Each year this seminar gets bigger and better as we cover in detail the essential elements in building a more successful FBO operation. For a complete overview of the topics we discuss, click here.

We look forward to reaching out to you through this blog and connecting on everyday issues that affect the bottom line of your FBO operation. If we happen to hit on a subject you’d like to comment on, or if you want us to address a certain issue, please let us know by sending an email to John Enticknap at jenticknap@bellsouth.net or Ron Jackson at rjacksongroup@earthlink.net.

One thing is for certain, we’ll add a little spice to your FBO life and maybe some sage advice 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 certified 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

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 Best Practices Series #9: Charge for the Free Stuff

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

- Authors of the forthcoming book: FBO Survival. 10 Tips to Keep Your Operations Lean, Mean & Profitable.

Welcome to our blog series on FBO Best Practices. With each blog post in this series, we’ll discuss “Best Practices” in running an efficient and effective FBO operation.

Best Practice #9: Charge for the free stuff. This is a simple reminder that every customer must contribute to your revenue stream, even the reluctant customer who doesn’t buy fuel.

The FBO business model that we’ve enjoyed for the past 50 plus years is dying a slow but inevitable death. If your FBO is still trying to exist on the margin charged on fuel sales, this is your wake up call.

In the “salad days” of our business, a healthy fuel gross margin of $2 per gallon or more would cover an FBO’s monthly expenses including the airport lease, insurance, facility upkeep and renovations, expansion, utilities, employee wages/compensation, fees and taxes, not to mention all the free stuff flight crews have come to expect.

But a $2 margin, normally factored into a posted price, is no longer realistic. No customer buys fuel at the posted price. It has been eroded over time by:

• Change in fuel buying habits by aircraft operators.
  - Pre-negotiated fuel purchasing.
  - Calling ahead for best discounts available.
  - Changing plans to get the best overall fuel purchase cost.
• No fuel required by operators.
• - Purchase of more fuel efficient aircraft.
  - Utilizing fuel tankering models.
  - Pre-established fuel points.
  - Better ATC routing for weather & flight planning to minimize costs.

• Fuel brokers negotiating lower fuel prices.
• Rising regulatory costs.
• Higher flowage fees charged by the airport.
• Increases in operating and insurance costs including liability, workman’s comp, health insurance, war risk, etc.

Note: An average sized FBO can have insurance costs as high as a $1,000 a day.

A Morphing Business Model

At the recent NBAA Conference held in Orlando, Florida on October 21-23, our company, Aviation Business Strategies Group (ABSG), was asked to facilitate one of our NATA FBO Success Seminar educational sessions titled: Get Ready for a New FBO Business Model.

A standing-room only crowd of aircraft operators and FBOs packed the session and took part in a lively follow-on discussion on how FBOs need to change the way they charge for services in order to continue providing first class facilities and great customer service.

The premise we presented is simple. As in the European FBO business model where services are unbundled, every aircraft operator that taxis onto your ramp must contribute to your revenue stream whether or not they purchase fuel.

Many FBOs have taken initial steps in this direction by imposing a ramp fee and/or a facilities fee. In general, these fees are normally waived if operators purchase a qualifying load of fuel.

However, many ancillary services are still being given away regardless of the selling price of a gallon of fuel. Aircraft operators expect baggage to be loaded and unloaded by the FBO. They expect trash service and galley service with ice and coffee. They may even expect free GPU and lavatory services as well as free towing, parking, tie downs and aircraft placement for departure. They also expect concierge services including taxi, limo and rental car logistics.

Then there are the clean restrooms, free coffee, popcorn and snack bar. Many FBO facilities offer a variety of crew lounges, rest areas, quiet rooms, computers, printers, Wi-Fi, copy, fax, flight planning, crew cars, and the list goes on.

As mentioned, gone are the $2 gross fuel margin days and selling fuel at the posted price. With all the customer and fuel broker pressures to discount fuel, gross fuel margins can get as low as $1.25 to $1.40 per gallon with some FBOs dropping to less than a $1 per gallon discount on contract fueling.

What aircraft operators don’t realize is when margins get this low, something has to give. Facilities fall into disrepair, customer service declines, dissatisfaction and disputes follow. No one wins in this scenario.

The New FBO Business Model

Since no FBO wants to be the first to start charging for unbundled services, what we at ABSG propose is a three-tier system.

Tier One: Full Service Pricing
Pay the full service posted price and get all the services thrown in.

Tier Two: Basic Fuel Service with À La Carte Pricing
Pay a discount off posted or a contract fuel price. Then pay for all the ancillary services requested. If no ancillary services, then also pay a facilities fee.

Tier Three: No Fuel Purchase
Pay a ramp fee, facilities fee and à la carte pricing for ancillary services requested.

At our NATA FBO Success Seminar, we discuss these issues in depth as well as a comprehensive examination of FBO operations, marketing, training and best practices. The next NATA FBO Success Seminar is schedule for March 9-10, at the Sands Expo Center in Las Vegas.

Tell us what you think—we appreciate your comments and thoughts. Also Like us by clicking the link below.

Send us an email to Ron@thejacksongroup.biz or jenticknap@bellsouth.net and visit us online at www.ABSGgroup.com.

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 AC-U-KWIK Alerts. 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 certified journalist and co-developed NATA’s acclaimed FBO Success Seminar Series. Ron writes an industry blog for Penton’s AC-U-KWIK Alerts titled: The FBO Connection.  Ron@thejacksongroup.biz  Ph: 972-979-6566 www.absggroup.com

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 Best Practices Series #8: Take Time to Develop Your Business Plan

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

- Authors of the forthcoming book: FBO Survival. 10 Tips to Keep Your Operations Lean, Mean & Profitable.

Welcome to our blog series on FBO Best Practices. With each blog post in this series, we’ll discuss “Best Practices” in running an efficient and effective FBO operation.

Best Practice #8: Planning, budgeting and sales forecasting. It’s not exciting; it’s not fun; but it’s essential to running a successful FBO operation.

Peter Drucker wrote, “The manager’s job is to keep his nose to the grindstone while lifting his eyes to the hills.”

We’re all guilty of focusing on the day-to-day grind and forget to look ahead and think, “what if?” Especially when the current business climate seems to be sucking us dry. Sometimes we need a little reality check.

Too often we seem to be obsessed with short-term results in our pursuit of business profit and management goals. If you have bankers, they want to see your monthly and quarterly results to make sure you can support your loan document covenants. 

If you’re a public company, you have one eye on the stock market and the other on short-term forecasts. Then you have to listen to critical analysts. “Got to have positive monthly results,” they say.

Now is the time of the year most FBO operators are thinking about what’s going to happen next year. They dream of a 50 percent increase in retail fuel sales, a full maintenance shop, and the end to contract fueling. Now that’s a good dream! Right?

Reality Check

Not so fast. The order of the day is to do a realistic sales forecast that forms the basis for a rational budget. Too many businesses start the planning process based on how much money they are going to spend on budgeted line items. They basically warm over last year’s costs, adjusting here and there.

However, a solid sales forecast drives a solid budget. Base the sales forecast on company history, at least the past two years. Factor in the national and local economy, projected business aircraft flight hours, projected fuel costs, aviation and health insurance. 

The fiscal budget is the short-term plan. Now, look to the hills and update the long-term plan. You might start with an examination of your airport lease agreement: Years left, rent increases, lease extension options, terms of extensions, requirement for major capital improvements. It just might be time to negotiate a lease extension.

Other items to review:  Business expansion plans, new hangar funding, add to charter fleet, new tug and fuel truck, renovating the terminate building.

Problem is, all of these items compete for cash and capital resources. The trick is to provide a balance between producing current positive results and investing in the future.

This can lead to a confusing management exercise where FBOs find themselves switching between visionary goals, intense investment, “performance-oriented” goal setting and/or retrenchment. The larger firms can even find themselves changing management teams.  Instead of keeping their nose to the grindstone, there is too much looking up.

Also, FBO owners must keep in mind that short-term strategies involving cost cuts may be short sighted and will not achieve short-term results or even meet long-term goals. Such as a 10 percent reduction in experienced labor, which can be self-defeating. We’ve even seen FBOs cut hangar rents below costs to attract new customers on the premise and promise of more fuel sales, which never come. 

Our Recommendation

Here is a list of action items we recommend:

• Complete a realistic budget for the coming 12-month period.
• Do reviews of the actual financial results and compare against your budget.
• Develop and use metrics that can be used to measure your business.
• Use dashboard reports to look at your business on a daily basis.

For longer-term planning, ask yourself these questions:

• How do we add value to our services and existing customers?
• Who are our target customers and what is our value proposition to them?
• What additional capabilities can we add to our business that adds value for our target customers?

These are fundamental initiatives for current performance and future investment that should serve as a guide for the near future planning. The results should be more sustainable and the company should not have to sacrifice the future for short-term gain.

At our NATA FBO Success Seminar, we discuss these issues in depth as well as a comprehensive examination of FBO operations, marketing, training and best practices.

Tell us what you think—we appreciate your comments and thoughts. Also Like us by clicking the link below.

Send us an email to Ron@thejacksongroup.biz or jenticknap@bellsouth.net and visit us online at www.ABSGgroup.com.

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 AC-U-KWIK Alerts. 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 certified journalist and co-developed NATA’s acclaimed FBO Success Seminar Series. Ron writes an industry blog for Penton’s AC-U-KWIK Alerts titled: The FBO Connection.  Ron@thejacksongroup.biz  Ph: 972-979-6566 www.absggroup.com

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 Best Practices Series #7: Find the Free Money

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

Welcome to our blog series on FBO Best Practices. With each blog post in this series, we’ll discuss “Best Practices” in running an efficient and effective FBO operation.

Best Practice #7: Find the free money! From fuel hedging to lowering your credit card interest rates, there’s free money in any FBO operation just waiting to be found.

Wouldn’t it be nice if you could turn over the couch in the customer lounge and find thousands of dollars dropping to the floor instead of nickels?

With more than 35 years of experience in managing and operating FBOs, we’ve learned where to look to find literally thousands of dollars of hidden money that can add significantly to your bottom line.

In fact, we’ve found so much money for our FBO clients that this has become a very popular session we teach at the acclaimed NATA FBO Success Seminar.

Here are the top four places we tell our clients to look:

1. Fuel Purchasing.
2. Credit Card Interest Rates.
3. Insurance Premiums.
4. Fuel Agreements.

Let’s break each of these down.

Fuel Purchasing

Stockbrokers will tell you to never try to time the market. However, when purchasing Jet A fuel, timing and pricing information is critical.

One of the techniques we teach at our NATA seminars is fuel hedging. Without going into a lot of detail, this is basically a process of knowing how aviation fuel is priced in your region and when to make the fuel purchase.

You should start with your last fuel contract negotiation in which you established your index pricing formula. Moving forward, it is important to keep track of the weekly changes in the Platts pricing indexes. This information should be available from your fuel provider upon request. However, obtaining the Platts data on your own requires a subscription, which can be rather expensive.

In lieu of a Platts subscription, you may also keep track of the price of a barrel of oil through USA Today’s Money/Business section or go to IATA-Jet Fuel Price Monitor, which is a free website.

With this type of information, you can purchase your fuel when the pricing changes to your advantage.

Credit Card Interest Rates

We’re sure you’re aware that transactional interest rates for branded credit cards can range all over the place. However, if you are a savvy FBO operator, you’ve done your homework and have trained your CSR staff to ask the customer to pay for their fuel with the card that favors your FBO by offering the lowest rate for your particular fuel transaction.

In some cases, it could be the card issued by your branded fuel provider. The processing interest rate for these cards can be as low as zero percent. With numerous purchases of 100 gallons or more during a 12 month period, this practice alone could save the FBO a significant amount.

However, if the customer does not have the card issued by your banded fuel provider, have the CSR ask for the next most favorable card in terms of the processing rate charged to your FBO.

For cards that have high processing rates, call the card issuing company and ask that the rate be lowered when processing a transaction at your FBO. As a backup, be sure to have some metrics in hand regarding the amount of fuel volume/transactional volume that flows through your credit card system. This information can be used as leverage.

Insurance Premiums

We find that many FBO operators don’t realize they can take steps to help decrease monthly insurance premiums. With numerous FBOs paying as much as $1,000 a day in premiums, any savings on this line item can be significant.

For starters, we coach our clients to write a good insurance story, especially if the FBO is using an insurance company that doesn’t quite understand the FBO industry. A good insurance story should include some of these items:

1. Discussing your training programs.
2. Your lack of accidents and incidents.
3. Establishing and discussing your Safety Policy and Objectives.

It’s also a good idea to establish and maintain a strong working relationship with your aviation insurance broker.

Fuel Agreements

One of our most popular services we offer is helping FBOs negotiate a favorable fuel agreement. Whether it’s with their current fuel supplier or going out for bids, there are many provisions in every fuel agreement that are negotiable and can save the operator both in the short term as well as over the life of the agreement.

Here is just one example. Review and discuss with your potential supplier where your primary and secondary fuel supply terminals will be located geographically in relation to your FBO. The location will affect your transportation cost, which is a negotiable cost. Also, don’t just accept one transportation firm’s fee. There is competition with various carriers for fees, surcharges and timing of deliveries.

Free money may not be easy to find, but it’s there if you are willing to look. Be the savvy FBO operator and know your options.

Tell us what you think—we appreciate your comments and thoughts. Also Like us by clicking the link below.

Send us an email to Ron@thejacksongroup.biz or jenticknap@bellsouth.net and visit us online at www.ABSGgroup.com.

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 AC-U-KWIK Alerts. 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 certified journalist and co-developed NATA’s acclaimed FBO Success Seminar Series. Ron writes an industry blog for Penton’s AC-U-KWIK Alerts titled: The FBO Connection.  Ron@thejacksongroup.biz  Ph: 972-979-6566 www.absggroup.com

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 Best Practices Series #6: Make the Customer Your Fan

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

Welcome to our blog series on FBO Best Practices. With each blog post in this series, we’ll discuss “Best Practices” in running an efficient and effective FBO operation.

Best Practice #6: Make the customer your fan by building a team environment designed to differentiate your service from the competition.

We all know what it’s like to be a fan. We have certain things we like and we support our choices by voting with our enthusiasm and our dollars. Maybe it’s the brand of car we drive, a favorite restaurant we frequent or a new movie we went to see.  It also could be a favorite sports team we back.

But the true test of being a fan is if we recommend something to someone else. It’s like putting our reputation on the line.

And so it is with providing excellent FBO services. Loyal customers are very much like a fan. If they like your service, they’ll  keep flying back and vote with their wallet.

So what’s the secret sauce? How can FBOs make customers their fans?

We can sum up the answer this way: Provide a noticeably high-level of service that beats the pants off the competition.

Although consistency is important, the key is to differentiate your brand of service from the FBO next door, across the field or at the nearest competing airport.

The Wow Factor

In past blog posts, we’ve talked about competing on customer service and not on price. That’s just common business sense. We also know FBOs can’t compete or differentiate based on a brand of fuel because fuel is fuel, Jet A is Jet A and Avgas is Avgas. It’s all the same!

The differentiating factor is your secret sauce, the way you deliver the fuel, the maintenance, the parts, the catering, the charter, the flight instruction and even the bill.

And the secret to the sauce are the ingredients: the individual employees coming together, working as a team and providing a noticeably higher level of service. It’s what we call the wow factor.

Customers notice how the entire FBO operation works collectively. They’re either impressed or they’re not. They’re either put into a comfort zone or they’re watching you like a hawk.

Your FBO can have the best, most personable CSR in the country, but if the line service technician and wing walker don’t tow the customer’s $50 million baby just right, all is for naught.

Building a cohesive FBO team can take the human relations skills of being a good coach. The really successful athletic teams all point to a common denominator of having a good environment in which to excel. A good coach will create this environment. A good FBO manager will do the same.

Vince Lombardi, arguably the most respected and revered NFL coach of all time, created a successful environment where his players thrived as a team.

Here is one of his quotes: "Teamwork is what the Green Bay Packers were all about. They didn't do it for individual glory. They did it because they loved one another.”

Good Customer Service Principles

In developing our acclaimed aviation-specific customer service training program, Don’t Forget the Cheese!, we recognized that it’s impossible to separate the requirement for customer service training from the need to build a good employee teamwork environment. One can’t exist without the other.

That’s why we based our integrated teamwork training on discovering the power of ”we.” It’s an interdependent approach to a realization that working together is a lot easier, and a lot more fun, than working individually.

When you combine these two important elements together, memorable customer service training in a dynamic teamwork environment, you truly can create the wow factor.

Here are some basic customer service/team building principles we teach. We hope they inspire you to create your own secret sauce:

1. Add something extra … make someone’s day.
2. Choose your own attitude; be an empathetic listener.
3. Adopt a ‘we’ attitude; play team ball.
4. Be consistent; set high standards.
5. Be flexible; own your mistakes. Be the person who delivers great customer service.

Tell us what you think—we appreciate your comments and thoughts. Also Like us by clicking the link below.

Send us an email to Ron@thejacksongroup.biz or jenticknap@bellsouth.net and visit us online at www.ABSGgroup.com.

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 AC-U-KWIK Alerts. 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 certified journalist and co-developed NATA’s acclaimed FBO Success Seminar Series. Ron writes an industry blog for Penton’s AC-U-KWIK Alerts titled: The FBO Connection.  Ron@thejacksongroup.biz  Ph: 972-979-6566 www.absggroup.com

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 Best Practices Series #5: Leverage Your Lease

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

Welcome to our blog series on FBO Best Practices. With each blog post in this series, we’ll discuss “Best Practices” in running an efficient and effective FBO operation.

Best Practice #5: Your lease is your leverage and the cornerstone of your enterprise. Don’t wait until your lease is ready to expire to develop favorable terms.

We’re often asked at our NATA FBO Success Seminars, “When is a good time to negotiate a new lease with the airport?” Having worked with many FBOs in restructuring their leases, we can say unequivocally the answer is simple: anytime.

This might sound contrary to what you’ve been told or believe, but here are the facts:

• A long-term lease is one of the best ways to add value to your FBO business.
• When you make any substantial investment in your business, negotiate a lease extension.
• Your lease determines how, what, when and where you can provide services at the airport. It needs maximum flexibility for your FBO to succeed.
• A lease with 10 years or fewer remaining is a major detriment to the value of your business.

Let’s look at an example where an FBO suffers from decreased value due to a short lease term.

In the current mergers and acquisition (M&A) market, a good FBO property will sell for approximately 10 times earnings before interest, taxes, depreciation and amortization (EBITDA). The industry uses EBITDA to evaluate FBO worth because it’s a measurement of a company's operating profitability. Because EBITDA excludes depreciation and amortization, EBITDA margin can provide an investor with a cleaner view of a company's core profitability.

Related: Breaking Down the 10 Critical Elements of an FBO Airport Lease

>> Part 1
>> Part 2 
>> Part 3
>> Part 4

Let’s assume an FBO is valued at $1 million EBIDTA. Applying the 10 times earnings multiple formula, the business might be worth $10 million on a sale. However, if the FBO has only 10 years remaining on a lease, the buyer will make nothing on his investment while assuming all the risk. Therefore, this deal will not get done!

So what does the buyer offer? Perhaps half of EBITDA or $5 million!

In a scenario where the lease has only five years left, the buyer may offer $2.5 million. However, the buyer may insist, as part of the lease assignment, the airport approve a lease extension. In this case, if the FBO owner obtains the lease extension prior to the sale and he enjoys the financial benefit!

FBO owners know too well that, as part of a lease negotiation for a new lease or a lease extension, capital investments are required. Because airport authorities/sponsors are seeking to build or expand their municipal airports, they understand a reasonably    long-term lease is required in order to amortize the FBO’s investment.

These lease issues were discussed a few years ago on a national level. Airport mangers know that without realistic lease terms, money is not available to the FBO at reasonable lending terms to build quality hangars and terminals.

Flexible Terms

Another important point we mentioned earlier involves flexible terms in the lease. When FBOs need to build facilities, they’re going to need capital. In most cases, FBOs will likely go to their local bank.

However, most bankers don’t understand the FBO business model. Imagine the banker’s surprise when he finds out the FBO doesn’t own any land!

Therefore, your lease is your collateral. You need a lease with at least 20 years remaining if you want to have a payback period of 20 years. However, the bank will need security as you get to the end of the payment period so a 25 to 30 year lease term is necessary.

Let’s say you get a lease for 20 years plus two five-year options to extend. The option language must be flexible so the banker understands you can extend the lease as long as you are paying your rent and in compliance with terms of the document.

An FBO also needs language in the lease to provide for the mortgage on the building to be built. The bank needs to approve this language as well as the airport. However, this can be difficult.

There are airport managements that don’t want to allow any mortgages. There may be banks that do not want to lend funds on leased land. All these issues can make for complicated lease negotiations. Therefore, an FBO must start early and allow plenty of time to complete a negotiation. This can take years.

Minimum Standards

In negotiating an FBO lease extension, minimum standards rules and regulations must be included. Minimum standards protect an FBO’s investment in their enterprise from unfair and discriminatory competition. Minimum standards lay out what services must be provided, what services are to be provided, and the size of the facility that must be built. Thus, minimum standards provide a level playing field for any competitor seeking to operate at the airport as they must also abide by the same rules and investment.

Tell us what you think—we appreciate your comments and thoughts. Also Like us by clicking the link below.

Send us an email to Ron@thejacksongroup.biz or jenticknap@bellsouth.net and visit us online at www.ABSGgroup.com.

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 AC-U-KWIK Alerts. 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 certified journalist and co-developed NATA’s acclaimed FBO Success Seminar Series. Ron writes an industry blog for Penton’s AC-U-KWIK Alerts titled: The FBO Connection.  Ron@thejacksongroup.biz  Ph: 972-979-6566 www.absggroup.com

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 Best Practices Series #4: Keep Customers by Empowering Your Employees

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

Welcome to our blog series on FBO Best Practices. With each blog post in this series, we’ll discuss “Best Practices” in running an efficient and effective FBO operation.

Best Practice #4: Empower your employees at the point of transaction in order to diffuse conflict and build long-term profitable customer relationships.

Factoid: Up to 95 percent of dissatisfied customers will return if you handle disputes in a timely and satisfactory manner.

In the FBO business, customers can become dissatisfied over seemingly the slightest of incidences or mishaps. Sometimes they may become irate and perhaps threaten to never come back. That’s because aircraft crews have a lot at stake in making sure their passengers are satisfied with every detail of their trip.

You may have heard of the expression, “You're as good as your last flight!” That’s the mantra of a business aircraft flight crew. And that’s why it’s important for FBO employees to stay in touch and in tune with the flight crew in order to anticipate their needs.

For the FBO owner, operator and manager, the key to keeping the customer happy is to empower employees at the point of transaction or the point of contact. This will help diffuse conflict and go a long way in building long-term profitable customer relationships.

So what do we mean by empowering? Simply put, the FBO operator or manager is giving permission to the employee to act on their behalf in solving disputes when they happen. However, some guidelines have to be established and customer service training of the employee is critical.

Example: A line service technician inadvertently over-fuels an aircraft. Instead of immediately informing the crew of the action, the employee panics, becomes frightened and ponders the mistake for more than 30 minutes before telling a supervisor.

By the time the supervisor is informed and the course of action is discussed, an hour has elapsed and the supervisor is trying to contact the crew who happened to have left for lunch 15 minutes earlier. Before leaving for lunch, the crew informs the customer service representative at the front desk that they want the aircraft positioned for embarking upon returning.

As they say, bad news doesn’t get any better with age.

When the crew was eventually informed they were not happy. Had the employee been empowered to own the mistake and trained to deliver the news to the crew immediately, corrective action could have taken place much sooner and a mutual solution found.

Instead, the inaction set off a chain reaction of rather unpleasant events including a departure delay and irritated passengers. And thanks to social media, the entire Western Hemisphere was informed in a matter of minutes.

In a situation like this, an empowered and properly trained employee would have had an opportunity to confront the crew and perhaps establish a relationship in a meaningful way. By owning the mistake, the employee can demonstrate problem-solving skills and even endear the dissatisfied customer by showing honesty, sincerity, integrity concern and resolve.

“Captain Smith, I have something I need to tell you,” the employee might begin, engaging the customer face-to-face making direct eye contact. “I inadvertently over-fueled your aircraft and I wanted to tell you right away so we can resolve this mishap without delay.”

“I can’t believe this happened,” Capt. Smith replied, raising his voice in disgust. “What did you have in mind? I can’t afford any delays. My passengers will be arriving right after lunch and we need to stay on schedule.”

“I know this is not what you expected,” the employee responds. “Our goal is to have you ready for departure when your passengers arrive. What I can do is …”

Based on the policy of the FBO, the employee can offer to offload some fuel or provide a deep discount for the gallons over fueled. By knowing what to offer the customer in this eventuality, the employee is able to problem solve and come to a solution very quickly without having to consult a supervisor, manager or owner.

The result is more than likely a repaired relationship and a restored level of trust between the employee and the customer. The employee showed concern, had an immediate plan of action, and resolved the incident without delay.

There are many ways to resolve these kinds of issues and a well-planned customer service training program, such as the acclaimed “Don’t Forget the Cheese! aviation training system,” is recommended to help FBOs empower their employees and build long-term profitable customer relationships.

Tell us what you think—we appreciate your comments and thoughts. Also Like us by clicking the link below.

Send us an email to Ron@thejacksongroup.biz or jenticknap@bellsouth.net and visit us online at www.ABSGgroup.com.

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 AC-U-KWIK Alerts. 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 certified journalist and co-developed NATA’s acclaimed FBO Success Seminar Series. Ron writes an industry blog for Penton’s AC-U-KWIK Alerts titled: The FBO Connection.  Ron@thejacksongroup.biz  Ph: 972-979-6566 www.absggroup.com

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 Best Practices Series #3: Use a Savvy Fuel Pricing Strategy: Think Win-Win

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

Welcome to our blog series on FBO Best Practices. With each blog post in this series, we’ll discuss “Best Practices” in running an efficient and effective FBO operation.

Best Practice #3: Although discounts off the posted price have become a standard industry practice, FBOs must use a savvy fuel pricing strategy and think win-win.

At our recently completed NATA FBO Success Seminar in Las Vegas, we again had very lively discussions concerning dealing with contract fuel suppliers as well as learning more about practical pricing theory. The bottom line: discounts on retail/contract pricing of fuel are here to stay as well as tight/competitive pricing in the maintenance shop.

So how do we manage these most important issues to maximize our return and profitability?

Let’s start by looking at a hypothetical business example we’ll call FBO XYZ. This FBO just paid $32,000 plus for a load of Jet A and their tanks and trucks are full.

The maintenance shop has 10 mechanics trained and ready to go. Payroll, wages and benefits for 25 employees, is due in five days to the tune of $23,750. However, the ramp activity has slowed way down and the maintenance shop is almost empty, therefore, cash is tight.

The posted price for Jet A at FBO XYZ is $6.37 per gallon. However, a little research reveals the average posted price for the regional area is $5.37 per gallon. In addition, the posted labor rate for maintenance at XYZ is $98.00 per hour, slightly higher than the regional average.

Although FBO XYZ may have the largest margins in the area, they just might manage themselves out of business unless they take a realistic approach to their pricing strategy. After all, customers do have alternate choices for picking up a load of fuel in the area and there is even more latitude in shopping maintenance needs.

Over the years, XYZ has stuck to their same traditional ways of doing business and has avoided dealing with contract fuel suppliers as much as possible. In addition, they’ve over bought on fuel and are experiencing a slower-than-normal maintenance market. Overbuying and sales dips are common problems in retail businesses both large and small.

Yes, an FBO is a retail business. XYZ sells a commodity, fuel, just like a retail store might sell shoes. Big box retail stores have spot discounts from time-to-time in order to move inventory. Therefore, FBO XYZ might consider taking a page out of Nordstrom’s or Macy’s playbook.

Sometimes FBOs think that by discounting/marking down the fuel price or refusing to do business with contract fuel suppliers they will automatically lose money. We are here to tell you the fastest way to go out of business is to hold on to old market pricing ways.

Discounts off the posted fuel price have become a standard industry practice. Look no further than the major FBO chains. They use contract fuel suppliers and deal directly with end users with discount programs. Yes, discounts are here to stay, but FBOs must use a savvy fuel pricing strategy and think win-win.

If you’ve been to one of our FBO Success Seminars or read our blog posts regularly you know we advocate pricing fuel and services based on knowledge. FBOs should know exactly how much it costs to pump a gallon of fuel while maintenance pricing is based on efficiency and carefully evaluating productive man hours.

With this knowledge, the best practice is to price fuel and services based on a win-win strategy where both the FBO and the customer feel they’ve received good value. This includes understanding the competitive landscape in which the FBO operates. Do your homework. There are several websites you can visit to gauge the average price of fuel in the area. To determine average aircraft maintenance rates, pick up the phone and call maintenance shops in the area and be sure to include the high-end auto dealerships where your customers have their cars serviced.

In essence, be competitive. However, do not discount to the point where you are competing solely on price. This only attracts the industry bottom feeders that are not loyal, complain, take up all your time and will flit to the next FBO offering the lower price.

Our research indicates the best way to differentiate an FBO brand is by developing an exceptional customer service experience. After all, fuel is fuel. But delivering a unique customer service experience, coupled with a sense of receiving a good value, become great motivators for a customer to return.

Here are a few tips to keep in mind:

• Create and base discounts around company goals
• Explain sales and discounts to customers
• Overbuying is the No.1 cause of excessive discounts

• Keep three to five days fuel inventory, no more
• Adjust labor sales to average labor hours available
• Only think about adding labor when overtime is more than 15 percent consistently

• Be flexible and timely with your discount structure
• Don’t give everybody your best markdown; deal on a case-by-case basis

One of the best ways to initiate a discount strategy is to target your potential customer base with a direct communication: phone, email or snail mail. Be selective on which potential customer receives an offer. Maybe it’s a customer you haven’t seen in awhile or you’ve tracked specific tail numbers to a nearby FBO competitor.

Once on the ramp, show them your best customer service experience. It’s truly win-win.

Tell us what you think—we appreciate your comments and thoughts. Also Like us by clicking the link below.

Send us an email to Ron@thejacksongroup.biz or jenticknap@bellsouth.net and visit us online at www.ABSGgroup.com.

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 AC-U-KWIK Alerts. 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 certified journalist and co-developed NATA’s acclaimed FBO Success Seminar Series. Ron writes an industry blog for Penton’s AC-U-KWIK Alerts titled: The FBO Connection.  Ron@thejacksongroup.biz  Ph: 972-979-6566 www.absggroup.com

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 Best Practices Series #2: Make a Good First Impression

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

Welcome to our blog series on FBO Best Practices. With each blog post in this series, we’ll discuss “Best Practices” in running an efficient and effective FBO operation.

Best Practice #2: You have but one opportunity to make a good first impression. Operate your FBO from a customer’s perspective.

Let’s face it. Customers choose FBOs that project a positive image and a feeling of trust, two very important elements in delivering a great customer service experience.

Like going to a Broadway play, your FBO is on stage every day for all your customers to see. When the curtain goes up, what do they get? Is it an illusion of smoke and mirrors, or a well-rehearsed movement of employees reading from the same script?

As stakeholders in this production, everyone from the top down and bottom up must view their facility from a customer’s perspective. We call this a customer-centric view. They need to take pride in ownership of the way the facility looks and, perhaps more importantly, the way it feels.

Seeing the way your FBO should look is easy. Go out onto the ramp and look back at your facility the way a customer would see your FBO for the first time taxiing in for service. Is all the equipment lined up and in good repair including the lav cart, APU, safety cones and chocks? Or are things looking a little disjointed, dingy, old with cracking paint, and safety cones that look like ones used in road construction.

The way the facility feels is a little more difficult to ascertain. We’re talking about the persona that your FBO projects ... character, personality and qualities. Do your line service technicians use crisp hand movements when ushering in an aircraft? Do employees present themselves in a professional manner? Is there a sense of teamwork and pride in a job well done?

Will customers feel at ease by what they see and experience? Or will they second guess their choice and wonder if even the bathrooms are clean.

Borrowing a page from our acclaimed Don’t Forget the Cheese!© customer service training program, emotions play a big role in deciding whether a customer will return and whether they recommend your facility.

Aircraft owners and operators are emotional about the care and feeding of one of the most valuable company assets: the business aircraft. With new aircraft costing upwards of $60 million, trust is a huge issue  and ranks high in importance on the emotional scale.

When a first-time customer visits your FBO, they will watch your line service employees like a hawk. They watch the way safety cones are placed at the tips of their aircraft, the way tow bars are utilized, the number of wing walkers used, and the safe and professional manner in which hangar movements are made. A returning loyal customer will be a little more at ease as trust continues to build.

Indeed, making that first impression is critical in growing your transient customer base. We all know that pilots have an expression that says, “You’re as good as your last flight.” Likewise, FBOs should hold themselves to a similar standard by saying, “We’re as good as our last fueling.”

Tell us what you think—we appreciate your comments and thoughts. Also Like us by clicking the link below.

Send us an email to Ron@thejacksongroup.biz or jenticknap@bellsouth.net and visit us online at www.ABSGgroup.com.

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 AC-U-KWIK Alerts. 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 AC-U-KWIK Alerts titled: The FBO Connection.  Ron@thejacksongroup.biz  Ph: 972-979-6566 www.absggroup.com

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 Best Practices Series #1: FBO Accident? Don’t be Sorry!

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

Welcome to our new blog series on FBO Best Practices. With each blog post in this series, we’ll discuss “Best Practices” in running an efficient and effective FBO operation. Also, please join John and Ron for the next NATA FBO Success Seminar, March 24-25, 2014, in Las Vegas.

Best Practice #1: Never say you’re sorry to a customer if you have an accident on the ramp or in the hangar of your FBO.

We know this sounds a bit callous and goes against everything society has taught us regarding common courtesy, but here’s why it’s important to keep emotion out the equation and treat an accident as an event.

The fact is an accident can potentially involve legal action. Therefore, statements made that are apologetic in nature could possibly be used as part of a lawsuit to show potential admittance to wrong doing on the part of the FBO.

At least, that’s our experience. However, before we go further with this post, here is our disclaimer: We are not attorneys. Please consult an attorney for legal advice.

As mentioned, the natural reaction to an accident is for an employee to offer an apology and once that happens, it often doesn’t stop there, especially if the accident involves the grounding of an aircraft. We’ve seen and heard of FBO employees going as far as immediately offering a charter aircraft and to fix the aircraft that’s damaged.

Further, no statements should be made regarding how the accident happened or inferences of assuming responsibility. And the restriction is not just for verbal statements. Employees should not use cellular phones to take photos or contact anyone regarding the accident especially texting or the use of social media such as Facebook or Twitter.

When substantial losses or lawsuits are anticipated, the prudent thing to do is not to talk about it to anyone other than a lawyer or insurance broker. This is a hard position to take when things go wrong at an FBO. Your customers are unhappy, your employees are unhappy and perhaps even under duress.

FBO owners and managers have to balance this uncomfortable situation and do the best for all affected parties. This includes protecting the business from potential lawsuits and unnecessary expenses while maintaining a trustworthy enterprise.

So what is the protocol in dealing with an accident?  Here are some general guidelines:

• If there are injuries, get medical help immediately and make sure all are out of danger.
• Employee, without delay, reports the accident to the supervisor.
• Supervisor contacts FBO owner/manager.
• Insurance broker is contacted and deals directly with the customer.
• If there is a risk management department, it should be contacted to manage the customer and their issues.
• Help the customer with such items as rental car and hotel arrangements. Note: The customer should pay for the rental car, hotel or other transportation, not the FBO.
• Be an empathetic listener for the customer. Do not get defensive. Act with understanding and seek to ease stress from the circumstances.
• Let investigators do their job. Liability needs to be investigated in a detailed investigation of the facts.
• Do not email or hold casual conversations on the incident. Investigative reports and details should be kept confidential between the FBO ownership and insurance brokers.
• All statements that have to be issued should be done so after consulting an attorney and/or insurance brokers.

Once again, please remember we are not lawyers, so consult with your attorney if you have an accident. Our advice is to be careful when an accident occurs and do not automatically make statements that assume the FBO is at fault … it’s not always the case. And above all, put your procedure in writing and educate your employees regarding the procedure. Keep a copy in your Standard Operating Procedures (SOP) manual as well as your Customer Service Manual.

Tell us what you think—we appreciate your comments and thoughts. Also Like us by clicking the link below.

Send us an email to Ron@thejacksongroup.biz or jenticknap@bellsouth.net and visit us online at www.ABSGgroup.com. 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 24-25, 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

Our 2014 FBO Industry Annual Forecast

Expect a Flat Market with Spotty Increases in Fuel Sales

Key for Success in 2014 will be Higher Margins on Static Volume

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

Recently we conducted our 2014 Annual FBO Industry Survey and the overall results indicate a mixed market that has yet to catch real traction.

We surveyed more than 500 FBOs and asked for responses to these statements:

• For this past year, 2013, please indicate how your FBO fuel sales performed compared to 2012.
• For this year, 2014, what are your predictions for your FBO fuel sales compared to 2013?
• In your opinion, is the economy headed in the right direction?

In general, there is a sense of status quo for 2014 with a majority of those surveyed predicting, at best, a breakeven marketplace. However, on the positive side, more than 40 percent predicted an increase in fuel sales volume with 20 percent of those surveyed projecting an increase of more than 5 percent.

Although there were reported pockets of increased fuel sales in 2013, nearly half the FBOs surveyed did not see an increase in business while feeling the economy is not headed in the right direction. We feel this trend will continue for 2014 with a relatively flat market and again some spotty increases in fuel sales.

While another year like 2013 is not necessarily good news, we feel the average FBO can improve profitability even in a flat market. Here’s what we believe are the keys to success for 2014 and beyond.

Keys to Success in 2014

1. Watch your margins closely.
2. Don’t give away your services.
3. Compete on customer service, not price.

Let’s break this down further:

Key No. 1: Watch Your Margins Closely.

If you’ve been to our NATA FBO Success Seminar, you’ve heard us go through the drill:

• Understand the true cost of pumping a gallon of fuel including labor, fuel truck lease, flowage fees, insurance, credit card charges, utilities, rent, coffee, ice, cookies, popcorn, etc. We’ve seen midsized FBO operations with an insurance bill that averages $1,000 per day.
• Set your own discount fuel price and don’t go below it. We all know the posted price myth: no FBO sells fuel at posted price. However, there is a discount limit you need to establish and stick to it. Too often, third-party fuel providers dictate your fuel price and chances are you lose money or breakeven at best.
• You may end up with less volume, but the fuel you end up selling is at a higher value and your bottom line will look a lot better. Sometimes less is more!

Key No. 2: Don’t Give Away Your Services.

If someone can show us another industry where the business model gives away so many services, please let us know. In reality, we’ve probably done it to ourselves by offering free newspapers, crew cars, coffee, ice, cookies, Wi-Fi, ushering, baggage handling, aircraft towing, parking, tie downs, multiple lounges, flight planning, etc.

Problem is that our current business model has spun out of control. Margins are getting squeezed and yet customers still expect the free stuff. You can’t go to the bank when you’re busy pumping a pre-arranged load of fuel at a heavily discounted price. Or, in the case of the reluctant customer, no fuel at all.

• Consider a two-tier pricing structure where everyone who comes on your ramp must contribute something to your business. Whether it’s a courtesy load, a top off, or a ramp and facilities fee.
• Tier One: Full Service. Pay something close to retail price and you’ll throw in the kitchen sink.
• Tier Two: A La Carte Services. Want a heavily discounted fuel price? Great! But pay for each and every service you use, including a facilities fee, to cover all the incidentals. That clean bathroom just didn’t happen!

Key No. 3: Compete on Customer Service, Not Price.

Yes, FBOs need to be price competitive, but they must maintain healthy margins and find other ways to compete through differentiation. One of the best ways we find to differentiate is to offer an outstanding and memorable customer service experience.

More and more FBOs are taking customer service training very seriously. Just as FBOs don’t tolerate mishaps on the ramp, they are becoming more conscious of eliminating miscues with the way they deliver customer service.

Here are suggestions for improving your customer service experience:

• Standardize your customer service training.
• Empower your employees to own their mistakes.
• Teach employees to deal with customer dissatisfaction.
• Motivate your employees to work together as a team.
• Measure your customer service delivery with a short survey.
• Ask the customer the really tough question: Would you recommend us?
• Monitor your loyal customer database. If you haven’t seen a regular customer in a while, find out why.

If you want to learn more about developing a customer service training program, check out our acclaimed Don’t Forget the Cheese!© The Ultimate Customer Service Training Program and visit our new website at www.absggroup.com.

During our upcoming NATA FBO Success Seminar to be held March 24 and 25 in Las Vegas, we will be discussing these major issues and much more. 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 jenticknap@bellsouth.net or Ron@thejacksongroup.biz.

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 #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