Flat Fuel Sales Reported for FBO Industry in 2022
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Annual FBO Fuel Sales Survey Results
The results of our Annual FBO Fuel Sales Survey indicate that on average, fuel sales were mostly flat for 2022. Although there were pockets of increased fuel sales, nearly 50 percent of FBOs surveyed reported either a decrease in sales or the same fuel sales levels for 2022 vs. 2021. By contrast, for 2021 only 28 percent reported a decrease or same fuel sales compared to the previous year.
At the far end of the spectrum, 22 percent of FBOs surveyed indicated an increase in fuel sales of more than eight percent for 2022 compared to 40 percent in 2021, a banner year for fuel sales after the FBO industry regained its footing following the Covid-19 pandemic. Comments by those taking the survey indicated that there were two main factors contributing to the fall-off in fuel sales from 2021 levels:
The high cost of Jet A was causing flight departments to scale back the number of scheduled flights due to budgetary constraints.
Decrease in the number of Part 135 Charter flights as passengers are going back the airlines for travel needs.
For 2023, FBOs are taking a cautious approach to predicting their fuel sales for the year with 67 percent saying they will have the same sales or a slight increase of one to four percent.
Another question we ask in our survey had an overwhelming lopsided response when asked if the economy was headed in the right direction? A majority 62 percent said no, it’s not headed in the right direction. 13 percent said yes while 25 percent were undecided.
As far as offering Sustainable Aviation Fuel (SAF) during 2023, only one percent said they would, 88 percent indicating they would not and12 percent were undecided. These are approximately the same results for the SAF question we received in the last four surveys.
Comments from several survey respondents on the SAF question indicate that they would put more consideration into offering SAF if it was more available in their area and the cost of transporting the fuel was reasonable.
Top Five FBO Industry Concerns
As part of our survey, we asked respondents to provide their main concerns for the FBO Industry. Here are the top five mentioned:
Increasing overhead costs, including labor, insurance premiums and upkeep of the facility.
Increased construction costs for improvements and expansions.
Affordable GSE to replace aging equipment.
Interruptions in the supply of fuel caused by shortages and supply chain issues.
Employee hiring and retention issues.
FBO Industry Forecast for 2023 and Beyond
As is customary with the release of the results of our Annual Fuel Sales Survey, we put together the following forecast for the rest of 2023 and beyond.
Expect higher inflation to continue for at least the next 12 months. A key to help lower and stabilize inflation will be to keep the cost of crude oil consistently below a target of $70 per barrel for WTI. But don’t expect this to happen until policies towards drilling are eased.
Expect business aircraft flight hours to keep flattening and continue a downward trend until inflation and the cost of crude oil are tamed.
As part of the Fed’s quest to quell inflation, expect higher interest rates and unemployment to rise. At some point, there will be a new normal that will dictate the health of the FBO industry for a period of at least 12 to 15 months.
FBOs should operate as if cash were king. Higher interest loans will force FBOs to put off major improvements to infrastructure such as new hangars and terminal buildings.
The FBOs that are prepared to weather the next 12 months are those that watch their fuel margins closely. Keep steady and avoid deep discounting to attract business.
Please leave any comments you have about this blog post below. If you have any questions, please give us a call or send us an email: jenticknap@bellsouth.net, 404-867-5518; ronjacksongroup@gmail.com, 972-979-6566.
ABOUT THE WRITERS: John Enticknap has more than 35 years of aviation fueling and FBO services industry experience and is an IS-BAH Accredited auditor. Ron Jackson is co-founder of Aviation Business Strategies Group (ABSG) 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. SUBSCRIBE: Subscribe to the AC-U-KWIK FBO Connection Newsletter © 2023 ABSG