By John L. Enticknap and Ron R. Jackson
Aviation Business Strategies Group
Editor’s Note: This is a special blog post by John Enticknap, who attended the 2015 NATA Aviation Business Conference that was held June 15-18, in Washington, D.C.
At the recent 2015 NATA Aviation Business Conference held last week, I had the privilege of sitting on a panel with Tom Hendricks, NATA president, Jim Hopkins, Landmark Aviation, and Clive Lowe, Atlantic Aviation, to discuss the current state of the industry and, in particular, FBO consolidation by the major and smaller chains.
We all agreed that consolidation activity will continue for the foreseeable future and, in fact, has recently picked up a little steam.
One of the questions we are often asked in our consulting business is, "With the chains acquiring all of the good independent FBOs, are there any left to continue consolidation initiatives?"
To prepare for this session and to help answer questions like this, we did a little industry research and came up with the following statistics, thanks in part to help provided by the good folks at AC-U-KWIK.
There are currently 3,650 FBOs in the United States and Canada. But not all of these FBOs are what we define as viable FBOs or FBOs that may be targets for acquisition. So what is a viable FBO? It should include the following criteria:
1. A sustainable business model.
2. Be profitable.
3. Attractive lease terms with long tenure.
In addition to these criteria, we need to define the business model. There are many FBOs in the United States and Canada that are located on small airports with runways that are less than 4,000 ft., with unpaved runways, and are primarily selling avgas with less than 500,000 gallons of aviation fuel sold per year. These businesses are generally not targets for acquisition. If we apply these filters to our 3,650 FBOs, we have approximately 1,600 FBOs left that have business enterprises that sell enough fuel, have hangars, and sell other services that allow the business to be sustainable.
We hear that the chains have purchased all the FBOs. Based upon our statistics, let’s really look at that question. The chain FBOs include the big three, Atlantic, Landmark and Signature, but also other smaller chains such as SheltAir, TacAir, Cutter, Jet Aviation, etc. Altogether, they comprise approximately 285 locations. The number keeps changing from month to month!
Based upon our FBO business model, only 17 percent of the viable U.S. and Canadian FBOs are operated by the chains!
This begs the question, will consolidation continue? The answer is definitely YES! Why? The business model works. By purchasing good FBOs and grouping them together, immediate added value for the buyer is created. Plus, there is the potential to operate the business more efficiently, drive more business to the location, and create or sustain a unique brand.
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
