When Negotiating the Best Fuel Supply Agreement, Preparation Is as Important as Price

“You hit home runs not by chance but by preparation.” – Roger Maris

Your fuel supply agreement is one of the most important contracts in operating a successful FBO. Your lease with the airport authority is what puts you in business, but your fuel supply agreement is what keeps you in business.

Because your fuel supplier agreement regularly comes up for renewal, do not just go out and get a “free” dinner with a fuel supplier and sign on the dotted line! If you want to know whether or not you have a competitive agreement, you’ll need to prepare, do some research and maybe invite several suppliers to submit proposals. As Roger Maris said, preparation will help you hit that home run.

There is a lot more to a fuel supplier relationship than just purchasing fuel. You are dealing with substantial costs that affect operating expenses and have an impact on your:

• Cash flow
• Balance sheet
• And, most of all, the profitability of your business

Yes, profit is great. That’s why you are in business. Don’t forget your fuel supplier is in business to make a profit too. You need balance in your agreement to ensure a winning contract for both parties.

In our NATA FBO Success Seminars, we teach a course about negotiating a favorable fuel supplier agreement. In this course, we also discuss how and when to buy aviation fuel. Here is an overview of some of the elements to address in a fuel supply agreement.

Be Prepared with Platts Oil Price Data

First, of course: What is the fuel going to cost? In order to answer this question we need to understand how world fuel markets work.

No doubt you hear all the time on the news what the price of crude oil is doing. As you know, it has been all over the place but mostly up, up, up — with an occasional downward correction. The price of crude drives jet fuel prices, but it is also affected by supply and demand, speculators, inventory, etc. So how do all the world buyers keep track?

The Platts Oilgram Price Report published daily by McGraw-Hill includes the Platts Jet Fuel Index. The fuel price indices are published worldwide with nine regional segments in the United States alone. There are also indices for Europe, Middle East and the Far East.

For general aviation, each week, the daily U.S. Jet A index prices are averaged. The change in the average price for the week generally is posted on a Tuesday, and your Jet A fuel price changes are calculated by the change in the average change for the week. You may purchase a  subscription to this information from McGraw-Hill. (It is expensive.) A free source of Jet A pricing information and changes is the IATA web site, which maintains the Jet Fuel Price Monitor and Fuel Price Analysis.

Making the Numbers Work

Because jet fuel is priced based upon a Platts index, ask your potential supplier to quote a fuel price based upon a nearby index. For example, we can choose the Gulf Coast, New York, Los Angeles or another available index.

Given that the fuel supplier needs to make some money, it will quote a price based upon a Platts index, plus a differential (the supplier’s profit margin). Ask several suppliers to quote a price based on the same Platts fuel price index for a specific date, plus a differential. Now you can measure each quote on an apples-to-apples basis.

Say your business is doing $5 million per year in fuel sales, and you are paying anywhere from $125,000 to $185,000 per year in credit card fees that can range up to 4 percent or higher. How would you like to save $10,000, $20,000 or even $30,000 per year on these credit card expenses?

Believe it or not, you can realize this kind of savings when you negotiate your new fuel supplier agreement. Yes, you may negotiate the best arrangement for credit card fees paid vs. payment terms. We like to call this free money! This savings goes right down to your profit line.

In addition, did you know that until recently, you were paying on average $0.41 per transaction for each debit card transaction? This fee just dropped to $0.21 in July!

When you ask various suppliers for a fuel proposal, credit card fees and payment of due amounts are part of the competitive nature of your agreement. By getting better rates on your credit cards and educating your employees on the best card to use, you can save substantial money for this expense. Again, free money!

Creating Cash Flow

When you have to purchase a load of jet fuel, you either need to have cash in hand or, in short order, the cash to pay for the load. That’s $25,000 or more.

If you have collected your accounts receivable and reconciled your credit card payments, then you’re in pretty good shape. However, if it happens to be Friday, the payroll is due, and your insurance payment is due, then, all of sudden, you’re short on cash.  

As part of your fuel supply agreement, you need to negotiate favorable credit terms. Of course you need to provide financial statements to support a credit line, which is no different than when you apply for credit from your local bank.

These are just a few of the terms that affect your profitability. You should also prepare to negotiate these other components that are part of a comprehensive fuel supply agreement:

• Marketing support
• Equipment leasing and maintenance
• Incentives to make a change in suppliers
• Pricing for 100LL fuel
• Transportation fees
• Contract fuel and other issues vital to your success

All these issues affect the cost and benefit to you and your fuel supplier. As the FBO owner, you should evaluate proposals from various suppliers to get the best agreement. Remember Roger Maris. Preparation is the name of the game when working toward a balanced fuel supply agreement.

If you would like more information or assistance in developing a favorable fuel supplier agreement, please let me know. In addition, the National Air Transportation Association (NATA) is a great resource. We will be covering this subject in detail at the next NATA FBO Success Seminar: Fuel Summit 2011, Nov. 8-10, Atlanta.

We would like to hear from you. Give us your comments. You can call me at 404-867-5518, email me at jenticknap@bellsouth.net, or go to our web site for more information: www.absggroup.com.

John Enticknap

John Enticknap founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including as president of Mercury Air Centers. He is the author of 10 Steps to Building a Profitable FBO and developed NATA’s acclaimed FBO Success Seminar Series.

Municipalities Competing with Private FBOs: Fair or Foul?

As many of you are aware, over the past couple of years there has been an effort by a number of municipal airport managements in the United States interested in entering the aviation services business where private enterprise providers already exist.

It’s a political hot potato to be sure. No one is suggesting that municipal airport-managed FBOs should not exist. There have always been airport-managed FBOs providing essential services at small and large airports, and for good reasons.

The controversy arises when a municipal airport authority decides to either compete with or edge out an existing private FBO enterprise. This begs the question: Is it fair, or is it foul? To answer this question, let’s examine both sides of the issue.

The Case for Municipally Run FBOs

Here are some background statistics from the 2011 NATA general aviation fact book:

• Total number of civil private-use airports: 14,353
• Total number of civil public-use airports: 5175
• Civil public use Part 139 airports: 551
• Civil public use non-Part 139 airports: 4624
• Total number of FBOs in the United States: 2987
• Approximate number of FBOs within chain operators: 250

As we can see by the above statistics, there is a very large number of airports and a relatively low number of FBOs. Without going into details, for airports with low traffic figures that cannot support a profit-oriented FBO, municipal airport management can provide essential services — fueling, terminal operations, tie downs and hangars. Our general aviation industry would not operate efficiently if these services were not available.

The statistics above also show that the FBO business continues to be fragmented, and major consolidation will continue to occur. Add to this the fact that only about 8 percent of the FBOs in this country are part of a network or chain. In addition, the vast majority of the 14,353 civil private airports are unable to support an FBO. At these airports, the operator of the airport must provide the essential services.

The Thin Gray Line

In some recent incidents, some municipal airport authorities are muddying the waters by threatening free enterprises. With reduced budgets and reduced business, they are now looking at getting into the business of offering private aviation services as a way to increase income and defray operating costs.

What is most troubling is that at some airports, the management is trying to displace existing private businesses.

Here are some scenarios that seem to be playing out:

• Existing privately held FBO’s lease comes to end. Airport authority takes over FBO operations.
• Municipal airport managements builds FBO with federal funds to compete against existing privately owned FBO.
• Existing FBO’s long-term lease is coming to end. Airport wants to build new FBO with federal funds to displace FBO. Considers federal funds “free” money.

Obvious questions arise. Should a government entity be allowed to enter an existing free market and compete against an existing private sector FBO? Should a municipal airport authority be allowed to eliminate private enterprise under circumstances listed above and become the sole source of providing a product or service where a private enterprise is available and can more than qualify?

So What Are We to Do?

There are no easy answers. Sometimes when government takes over there is not much you can do. The government has sovereign immunity, and many attorneys will tell you that you do not have a realistic chance to win a lawsuit. In the majority of cases, litigation ends up being a costly waste of time.

Yes, you can do plenty to protect your business. But sustaining your FBO with a satisfactory long-term lease is not necessarily a purely business proposition. Rather, it requires an effort to pull together your political, business and legal skills.

First and foremost, you must participate in your airport and business community. That means being a part of and taking part in the airport management processes no matter what kind of management structure the airport operates under, whether run by the city, airport authority or county municipality. You, as a tenant on the field, should be attending all public airport meetings, get to know the manager and board members, be part of the local business community and be involved in supporting local civic organizations.

These activities will give you information! You can get to know the thinking of the airport personnel, know the finances of the airport and know the political movers and shakers. By having knowledge of the local political and business community, you can get a sense of what you need to do to extend your lease.

Further, you should have an idea of the temperament of the airport authority. You should have a sense for whether it will negotiate a new lease, whether the airport is willing to have a Request for Proposals (RFP) process and what the “hot buttons” or issues are for the airport.

Get Help!

• You might want to engage your attorney, who is no doubt a major part of the local business and political community. Engage some experienced consultants in the industries who have dealt with these complex issues before.
• Contact NATA. This organization is very involved in this issue. It has already engaged government officials on several levels to support private FBO businesses.
• Contact your senators and congressperson to support the Freedom from Government Competition Act, H.R. 1474/S.785. This bill removes the unfair advantage government has by subjecting commercial activities performed by government entities to market competition to benefit the taxpayer.

We have to be actively involved in our businesses and not only on the day-to-day operational issues. You must also be involved in the local business and political community. These are not easy issues to deal with. Remember, airports are businesses also. They are always seeking more traffic count and federal funding and dealing with many environmental and political issues themselves. Be part of the solution for their issues.

Remember, don’t be the FBO owner who wonders what happened. Be the owner that makes things happen!

What do what you think of this issue, or what you have done to protect your FBO as a going concern? Let us know in the comments, and email me at jenticknap@bellsouth.net.

FBO Success Seminar Registration

The next NATA FBO Success Seminar is scheduled for Nov. 8-10 in Atlanta. Register at nata.aero.

John Enticknap

John Enticknap founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including as president of Mercury Air Centers. He is the author of 10 Steps to Building a Profitable FBO and developed NATA’s acclaimed FBO Success Seminar Series.

When Pricing Fuel, Use Numbers to Your Advantage

“You can't do today's job with yesterday's methods and be in business tomorrow.” – Anonymous

We know the pricing game all too well. Gas stations and auto dealerships have conditioned us to react to pricing of a product or service by offering a perception of a good deal.

In the FBO fuel pricing arena, we tend to play the same game.

In a previous blog post, FBO Fuel Pricing: Seeking a Silver Bullet, we discussed some pricing theory and came up with some ideas to find the silver bullet — which is the best price.

In the FBO business today, some customers call ahead for fuel prices, seek to use contract fuel suppliers and try to negotiate when they arrive on your ramp. We would like our customers to believe that our prices are well thought out and not just some arbitrary posted numbers.

Knowing how customers interpret numbers can help your FBO make stronger pricing decisions. What we would like to discuss here are some thoughts that go through people’s minds when they are looking to purchase. Consider these ideas drawn from “The Importance of Numbers,” written by Geoff Williams and published in Go magazine:

Make Your Prices Easy to Remember

If you make your prices easier to remember, comparison shoppers should think of your FBO more readily. Your potential to complete a sale increases.

The numbers 0 and 5 are remembered easily. For example, $4.70 for a gallon of fuel is easier to remember than $4.72, and $5.50 sticks better than $5.58.

Precise Numbers Feel Firm

Precise numbers seem less flexible to consumers than rounded numbers, according to a study by a social psychologist named Matt Wallaert. If you price your fuel at $6.00 per gallon, your price might seem flexible. If your price is $6.23, it appears to be non-negotiable.

Minds Play Tricks

Our minds play tricks, according to DePaul University professor and pricing expert Tim Smith. Auto gasoline priced at $3.699 is really $3.70 a gallon. In the Western world, our languages read left to right, so to some extent, we encode the lower numbers on the left first. In addition, we seek the best deal from a rational point of view, but we perceive emotionally that we have “saved” by not paying $3.70 a gallon.

We tend to have a mindset when it comes to prices. It is incumbent on us to break out of normal thought patterns and be original with our pricing proposals to pilots. If you know how people view numbers, you can predict their reaction to prices and, therefore, price more strategically. For example, above a certain threshold — say $5.00 per gallon — people will not react too differently to $5.25 or even $5.45 a gallon. They will not balk until you approach the next threshold, $6.00 per gallon. For maintenance services, on a higher price scale, $875 is better than $900, yet $825 will sell as well as $800.

Blogger John Enticknap presents at the 2011 Florida Aviation Trades Association (FATA) annual conference.Much can be said about numbers and their importance to your pricing theory as well as your target margin — both gross and net. By keeping in mind some of the psychological factors discussed above, you have a better chance of making the sale.

As our anonymous quote states, we must keep an open mind and study new business ideas and methods to be successful. Yes, we see many of the same business situations time and again in the FBO business, but that should not allow us to get complacent or not try new thinking.

Stay flexible, and stay informed.

Please let me know what you think, and share your ideas. Please email me at jenticknap@bellsouth.net.

FBO Success Seminar Registration

The next NATA FBO Success Seminar is scheduled for Nov. 8-10 in Atlanta. Register at nata.aero.

John Enticknap

John Enticknap founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including as president of Mercury Air Centers. He is the author of 10 Steps to Building a Profitable FBO and developed NATA’s acclaimed FBO Success Seminar Series.

The Cost of Aviation Fuel, Part 2

FBOs Might Need a Two-Pronged Pricing Strategy

"Everybody has accepted by now that change is unavoidable. But that still implies that change is like death and taxes — it should be postponed as long as possible and no change would be vastly preferable. But in a period of upheaval, such as the one we are living in, change is the norm." – Peter Drucker, Management Challenges for the 21st Century (1999)

Recently, I was reading an article posted to Eye on the Economy on msnbc.com. The article was titled “As oil prices drop, Fed should get credit.” After reading the article, I decided to write Part 2 to a previous blog post titled The Cost of Aviation Fuel.

In the first post, I talked about continued increases in the cost of aviation fuel and what FBOs can do to mitigate high retail prices. We looked at a number of the reasons for the increasing cost of fuel:

• The Fed policy of a weak dollar — a weak dollar requires more dollars to buy a barrel of crude oil.
• The continued unrest in the Middle East.
• Uncertainty with the federal deficit.
• Speculators betting on the increased price of fuel.
• Lack of offshore drilling in the United States.

Since then, here is what is happening in the world markets:

1. The dollar’s value is up 3 percent so far this month after sliding 15 percent against other currencies over the past year.
2. Global growth seems to be slowing.
3. The inflation threat from easy money policies may be easing.
4. Oil stocks have remained high even with the unrest in the Middle East.
5. Inflation fears in Europe have prompted European central banks to raise interest rates.
6. China has required its banks to hold larger cash reserves to help curb inflation.

The Platts fuel index prices peaked two weeks ago. The Gulf Coast Pipeline mean was $3.3239 per gallon. Looks like the West Coast took the prize for the highest Platts prices at $3.4275.

So what happened in the last two weeks? Prices dropped more than 15 cents last week (May 10). This week, we have seen nearly an additional 8 cent drop (May 16). We now have a drop of 23 cents!  Perhaps your customers are wondering why you haven’t dropped your price.

I’ve seen posted retail prices of Jet A as high as $8.74 per gallon. Who is going to pay that for jet fuel?

And what’s going on with oil futures? The trend right now is good, but will it last? There are many factors in the national and world marketplace that can affect what is happening.

On a national basis, we have the debt ceiling vote coming within two weeks or so; the economy might continue to slow; demand might be down; the Middle East could get more unstable. All these issues can negatively affect the markets and drive up prices again.

It appears the oil commodities markets/speculators are backing off the high prices to be paid for futures.

Simply put, the forces that drove the market up are now down.

All this begs several questions:

• Will the fuel prices continue to drop?
• How do I react and price my fuel?
• The customers want better prices now! How do I help them while trying to keep my business profitable?

What Can You Do?

First, do not change your price! You have all that high priced fuel in storage — the same goes for the terminals and pipelines. This high-priced inventory will take a few weeks to work itself through the system. So when you purchase you next load of fuel, you will then be able to purchase at the lower price. How fast you turn over your fuel will determine how and when you pass along price reductions to your customers.

In a previous blog post, we talked about FBO Fuel Pricing: Seeking a Silver Bullet, so we won’t plow that ground twice. Suffice it to say you must maintain your margin to sustain your profitability and understand pricing theory. But the high price of fuel is making the customers very price sensitive. Change is coming!

Dual Pricing Strategy

One possible scenario is to establish a dual pricing strategy by providing an a la carte service as well as a full-service offering.

Remember when gas stations offered two levels of service, self service and full service? You would pay extra if you wanted everything under the hood plus your wipers and tire pressure checked. Otherwise, you saved by doing it yourself.

An FBO could offer two levels of service as well. For instance, you could offer full service for one price, whether retail or contract fuel. Under this pricing scenario, you continue to offer all your usual amenities for one set full-service price.

Then you could offer a discounted or a la carte “basic” service price. If the operator wanted other services, he could pay for ice, coffee, papers, lounge, transportation, baggage handling, galley and lav servicing, etc.

Our advice is to stay in touch with your fuel suppliers and what is happening in the national and world marketplace. Change will continue to happen, and you must be aware of it and react in a reasonable businesslike manner to be successful. Think seriously about an a la carte or full-service pricing methodology.

FBO Success Seminar Registration

The next NATA FBO Success Seminar is scheduled for Nov. 8-10 in Atlanta. Register at nata.aero.

John Enticknap

John Enticknap founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including as president of Mercury Air Centers. He is the author of 10 Steps to Building a Profitable FBO and developed NATA’s acclaimed FBO Success Seminar Series.

The Value of a Business Plan in Managing Your FBO

“A business plan is primarily an organizing tool used to simplify and clarify business goals and strategies, which might otherwise appear complex and intimidating. However, a business plan is also a sales tool. … Having no plan is like sailing the seven seas without a compass, digging a ditch without a shovel, or hunting for pirate's treasure without an 'x' marks the spot. Without one, you're better off heading down to the horse races and betting on the 'Win Three.' A plan helps keep you on schedule, makes it easier to recognize success and failure, helps pump you up when things aren't going so well, and most importantly, provides an essential focus.” – Peter J. Patsula, The Entrepreneur's Guidebook #9, "Supercharging Promising Projects with a Plan of Action.”

In some of our previous blog posts, we have mentioned the need to develop a strategic business plan, not only as a way to define business goals, but also to help formulate your personal goals, such as detailing an exit plan from your FBO business.

As most of you know, if you want to borrow money from a bank, the SBA or other sources, one of the first things they will ask you for is a business plan. This alone is a good reason to develop one. However, beyond this basic need, a business plan can be much more and serve your business in many different ways.

The quote above illustrates the many benefits in developing a business plan. As any pilot knows, without a proper flight plan, you will never get to your destination efficiently.

Developing a plan can be intimidating, but it’s not too bad when you keep it simple. Do some organized research on your business; ask some fundamental questions; do a SWOT (strengths, weaknesses, opportunities and threats) analysis; conduct a market and pricing analysis; then lay out your plan in an organized manner.

Plan Basics

Let’s look at some basics involved in developing a plan:

Company Description: First, we need to establish the baseline information for your firm, including the type of business you run, the management and employee structure and a statement to define the mission of your company as well as a sense of your vision and direction for the growth of the company.

Industry Analysis and Trends: Define the marketplace you operate in now and the near future; this includes seasonal factors, maturity of the industry, etc.

Target Market and Audience: Define what markets you serve and detail any new business areas in which you wish to operate. Also define your target audience or audiences (customer groups) you would like to attract to your business.

The Competition: Define and isolate your competition by looking in detail at not only your competitors on your airport but also within a 50- to 100-mile radius.

Strategic Position and Risk Analysis: Consider doing a SWOT analysis to evaluate your company’s strengths, weaknesses, opportunities and threats. Included should be an internal survey of all your employees to gain their input as well as vendors and suppliers who know your industry and perhaps sell to your competitors. Find out what may differentiate the way you do business from your competitors and use this to position your brand in the marketplace.

Marketing Plan and Sales Strategy: Analyze what you are doing to promote your business now, and develop new ways you can penetrate existing markets and branch out into others. Also, define your sales goals and objectives in terms other than the amount of money you want to make. Rather, state in terms of actionable items that can be obtained and measured in terms of results.

Operations: Review your existing business and how it operates — labor, equipment, technology, customer service and management information systems.

Community Involvement: We all know this is a relationship business, so include in your plan what you are doing, or willing to do, within your own general and business community. If you’re already involved, think what you would like to do better.

Development, Milestones & Exit Plan: Detail your long-term goals, growth strategy and exit plan including a timeframe to complete.

Financial Plan: This is the bottom line. Determine what the business is doing from a profit-and-loss point of view, and define the short-term and long-term capital needs to get where you want to go.

Guide Points

To sum up the critical path in starting, developing and finishing a plan, think of these three simple guide points:

• Develop a fundamental understanding of where you are today.
• Take a realistic view of your options moving forward.
• Think of your plan as a roadmap to success, a guide you refer to along the way to keep you on course.

The whole point of a business plan is to have firm ideas of where you are and where you want to go while realizing there are some hard choices to be made along the way. In the end, keeping focus is the key ingredient to success, and a plan will help you keep that focus.

Have any additional thoughts? Please email me at jenticknap@bellsouth.net.

John Enticknap

John Enticknap founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including as president of Mercury Air Centers. He is the author of 10 Steps to Building a Profitable FBO and developed NATA’s acclaimed FBO Success Seminar Series.

The Cost of Aviation Fuel

Why is the price continuing to increase, and what can an FBO do?

“Business, more than any other occupation, is a continual dealing with the future; it is a continual calculation, an instinctive exercise in foresight.” – Henry R. Luce

We think it’s fair to say we are all feeling the impact on fuel price increases over the last six months or so. As a pilot, I’m seeking the best fuel price and am modifying my flying patterns to get the best deal.

Historically, after an initial spike in oil prices, the market tends to settle down. So why haven’t we seen a stabilization in Jet A fuel prices? What’s causing the volatility in the open and spot fuel markets?

Besides the obvious affects of world events, including the disaster in Japan and political upheaval in the Middle East oil-producing regions, there are other underlying dynamics that contribute to rising aviation fuel prices.

What Others Are Saying

Let’s review a few articles that have been written lately.

• “Angry Over Oil Prices? Demand A Change In Fed Policy” by Charles Kadlec, Forbes Magazine 
• “Oil Spike Prompts Airline Profit Fears” by Jens Flottau and Madhu Unnikrishnan, Aviation Week  
• “Make Your Fuel Fly Farther: Strategies That Can Save You Money,” published by the National Business Aviation Association (NBAA) 

As discussed in Charles Kadlec’s article, the current Fed policy of keeping the value of the dollar low in the international markets is one of the main influences. Because it takes more dollars to buy a barrel of oil, the low dollar value pressure drives up the costs. It’s not necessary to review the entire article here, but suffice it to say the continued low value of the dollar is not going to reverse anytime soon.

In the article “Oil Spike Prompts Airline Profit Fears,” the authors discuss in detail the increasing cost of fuel and its effects on the airline industry. The airlines anticipated the increasing cost of fuel to be in the $75 to $90 range, but now a barrel of oil costs more than $108 this week. The economics of the airlines are such that a $1 increase in the price of a barrel of oil will increase the costs to the airlines more than $1 billion in a year.

As a result, the airlines are looking at a $10 billion cost increase in 2011 with fuel costs, on average, representing approximately 29 percent of the airlines’ operating costs. In order to gain back revenue, airline ticket prices are going up. Expect to see more fees and reduced flights with higher load factors.

The NBAA article details some similar statistics. They indicate 20 to 25 percent of a turbine operator’s cost of operation is fuel. The article notes, as we have discussed in previous blogs, that corporate operators are utilizing tactics such as using contract fuel providers, discounts with their base FBOs, tankering fuel and other fuel savings measures.

What Does the Crystal Ball Say?

As Henry Luce noted in his quote, in business we are always trying to look into the future. So looking into the crystal ball, what is going to happen with fuel costs, and what can we do about it? With the continued world unrest in the Middle East, oil prices will probably remain volatile.

The wild card in this equation is the Fed monetary policy. If the dollar remains weak, it’s our opinion the price of a barrel of oil is not going to go down anytime soon. Unfortunately, these factors are also going to slow down the economic recovery.

The bottom line: Just as the airlines are dealing with higher fuel costs, the cost of operating your FBO is going to go up and will probably not get any better soon. You’re also going to continue to see increased pressure on your fuel margin as aircraft operators, faced with their own budget problems, seek to negotiate better fuel prices.

So how do you survive during this fuel crisis? First, you must reconnect with your customers. Get out from behind the desk, and be a pro-active owner/operator. Be the restaurant owner!

Get to know your base customers and your transient customers. Learn their needs, wants and desires. By knowing your customers’ requirements, you can negotiate your own fuel delivery program that is customized to their operating parameters. At the same time, you minimize outside influences and maximize your returns. With regards to transient customers, you should already know who is flying into your location, so meet with them, and negotiate a reasonable service fee program which includes your fuel delivery.

Secondly, remember the Pareto 80–20 Principle.

Generally, the Pareto Principle is the observation (not law) that most things in life are not distributed evenly. It can mean all of the following things:

• Twenty percent of the input creates 80 percent of the result,
• 20 percent of the workers produce 80 percent of the result,
• 20 percent of the customers create 80 percent of the revenue,
• And on and on.

The Pareto Principle helps you realize the majority of results come from a minority of inputs.

As the FBO manager and chief marketing/sales person, this principle can help you concentrate your efforts by identifying your top customers — the important 20 percent that generate 80 percent of your business. That is the best bang for your buck. Know these folks well. This understanding of the vital few is what will make your business successful, and you can manage the change in cost of fuel.

Remember our premise as we forecast for the future. Concentrate on what you can control in a measured and methodical manner. We have little control over world events or what the Fed is going to do with monetary policy.

How are you dealing with the higher fuel costs? I’d like to know. Please email me at jenticknap@bellsouth.net.

John Enticknap

John Enticknap founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including as president of Mercury Air Centers. He is the author of 10 Steps to Building a Profitable FBO and developed NATA’s acclaimed FBO Success Seminar Series.

Flight Schools: Time to Think Outside the Box

“He who would learn to fly one day must first learn to stand and walk and run and dance; one cannot fly into flying.” – Friedrich Nietzsche, 1844-1900

Friedrich Nietzsche, a controversial philosopher for his time, made this statement before the Wright Brothers even flew, so we may assume he was not referring to the business of training people to fly. However, this quote has much relevance to our FBO flight training activities today.

It wasn’t that many years ago that the majority of FBOs were defined as “full-service companies” offering flight school training, new and used aircraft sales, charter, maintenance, hangars, and terminal facilities.

The business model was to market to potential pilots, both professional and recreational, train them, sell them an airplane, hope they would trade up, maintain the airplane, hangar it and, of course, sell them fuel and various services. As the pilot grew in experience and need, the FBO could make a good living by selling the next biggest aircraft.

It was a cradle-to-the-grave concept, and it seemed to work just fine.

The Changing FBO Business Model

However, in the last 30 years, the business of running an FBO has become much more specialized. It has evolved to the point that a full-service FBO is almost nonexistent. We now have businesses that have become SASOs (specialized aviation service organizations) that specialize in primarily fuel, line services and real estate management.

On one hand, I believe this has been a healthy trend for the industry because it allows the owners to specialize in a narrow facet of the FBO business based on their particular talents and knowledge.

On the other hand, this trend has taken the emphasis away from developing a growing pilot population. The growth of aviation is directly tied to maintaining a high interest in training new pilots. The pilot population topped out a number of years ago and has been declining ever since.

We hear all the usual arguments: high cost (by the way, it has always been costly to learn to fly), poor flight instructors, old slow aircraft, etc. AOPA recently completed a study of the student pilot dropout rate, so there will be more talk of that in the near future. That is a subject for another time.

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

That leaves primarily the specialized schools to fill the void. We have a few national chain flight schools, those schools specializing in instrument training and individual schools that target specific market segments. These segments may include foreign students, those interested in recreational flying, Type A business executives with the means and motivation, and colleges, as well as others.

Pilot Retention

Besides attracting new pilots to enter a flight training program, one of the major problems flight schools have is retaining the interest of the pilots throughout the process. Historically, there is a drop-off after soloing and again after finishing training.

When a new pilot, be it a private pilot, recreational pilot or even those who are starting a piloting career, passes the final flight check, the big challenge for the flight school is to keep this new pilot coming back for more advanced training! This is when the flight school owner, instructors, staff — the whole team — needs to think outside the box and get creative in the area of retention.

In other words, they need a dynamic marketing plan to develop pilot-specific programs to grow the new pilot, keep the interest level up, improve skills and generally have fun. Remember, for the most part, you are competing for discretionary dollars, which can go for flying, boating, golf, sport cars, etc. Here are some ideas for keeping pilots at your flight school:

• Have pilots join the Wings Program, a pilot proficiency program that can be taken online as well as flying. Sign up at www.FAASafety.gov to create your own account, and educate your flight instructors. See the new Advisory Circular AC 61-91-J.
• Tail Wheel endorsement: This will make your new pilot a better pilot.
• Trip to ATC Facilities: Great for IFR and instrument rating trainees.
• Trip to Altitude Chamber: This is good for all pilots.
• Flight Reviews: Both VFR and Instrument Proficiently Check. Find the Instrument Proficiency Check (IPC) Guidance publication at  www.FAASafety.gov.
• Weekend Ground Schools.

What’s most important is how you market these programs. You need to have a customer base from your existing pilots, a database of the existing pilot population from a radius of 200-300 hundred miles, advertising in the local/regional aviation publications, an e-newsletter campaign, social media presence and a sustained community outreach to the interested pilot population. All this should be part of your original business and marketing plan.

So what can Friedrich Nietzsche teach us? For all successful business enterprises, we “must first learn to stand and walk and run and dance” before we can fly. And how do we fly? We develop and use a well-matured business plan, spend some time thinking creatively with the team and remember to add a little fun along the way.

If you’ve had success developing a flight training retention program, I’d like to hear from you. Email me at jenticknap@bellsouth.net.

John Enticknap

John Enticknap founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including as president of Mercury Air Centers. He is the author of 10 Steps to Building a Profitable FBO and developed NATA’s acclaimed FBO Success Seminar Series.

Optimizing Your FBO, Part 2: Cross-Train and Outsource

In Part 1 of Optimizing Your FBO, we talked about analyzing your business and investing in your front line employees. It just makes good business sense, even in tough economic times, to invest your time and resources in your front line employees because they have the first and the most important contact with your customers.

In this post, Part 2 of Optimizing Your FBO, I want to share additional strategies that will help prepare you to weather any kind of economic environment and increase the efficiency of your operation.

Cross-Train

For most FBOs, employees must learn to multitask — a term that management gurus have coined. It’s really a new term for an old axiom. The best employees, who do the best jobs, can do many different tasks. Gee, what a concept!

For FBOs that are consistently successful, employees do many different job functions that result in a more efficient operation and better employee morale. A happy employee, a happy customer. It can be a very contagious working environment that results in better customer service. Cross-training makes all employees more valuable and better motivated.

Let’s look at some ideas:

• Why not train your CSRs to meet and greet arriving aircraft? You’re already paying the Workers’ Compensation rate for ramp on the CSRs!
• How about training your CSRs and building maintenance staff to be wing walkers? Tip: Having two wing walkers, especially in hangar movements, can decrease your incident rate and could help lower your insurance premium, another cost savings.
• Get your accounting staff outside to learn about fueling and tank farm quality control. They might even learn about fuel quality control and inventory procedures.
• When was the last time the executive staff worked the ramp or talked to arriving pilots and passengers?
• Encourage ramp staff and the executive staff to walk the ramp for FOD and look at the FBO facility from the arriving pilot’s point of view.
• Your A&P mechanics need to meet, greet and be part of the customer’s maintenance project. Once the inspection is completed, the A&P should be part of the discussion with the owner on what is to be fixed; obvious but rarely done.
• In your flight school, when was that last time your chief instructor called and talked to the students before a check ride? Find out how the student likes flying and the learning experience.

Outsourcing

Many FBOs feel outsourcing is what big companies do, not smaller aviation service companies. The fact is, many services an FBO provides are not necessarily full-time, around-the-clock services. Outsourcing may actually save you money and help keep your front line employees focused on better serving the customer.

For instance, building cleaning, most especially restrooms. This service is not one most employees enjoy, so let’s outsource it. There are many vendors available to do this as well as provide the cleaning solutions, toilet paper, hand towels, etc. Get competitive pricing and monitor closely.

Another area is maintaining indoor plants as well as outdoor landscaping. This is a pain in the neck for most employees, but if you want a first-class FBO facility, you need to pay attention to interior details and keep the grounds well groomed. Get a number of bids, and again, monitor closely.

How about providing some extra services on an on-call basis? No overlapping costs while providing more services and a new stream of income. For instance:

• Aircraft interior cleaning
• Aircraft exterior services
• Quick-turns cleaning
• Customer car washing and detailing
• Customer car valet service

In larger cities or communities, there are vendors you can source that specialize in aircraft cleaning and detailing. In smaller communities, you may be able to find a good auto detailer that you can trust and help train to provide on-call services such as aircraft cleaning services, auto valet, customer car washing and detailing services.

What are some other ideas for cross-training and outsourcing? If you have some ideas that have worked at your FBO, please send them to me and I’ll include them in a follow-up blog. My email is jenticknap@bellsouth.net.

John Enticknap

John Enticknap founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including as president of Mercury Air Centers. He is the author of 10 Steps to Building a Profitable FBO and developed NATA’s acclaimed FBO Success Seminar Series.

Pricing Your FBO for Sale

Don't Get into the ‘Multiple’ Trap

As we start to see a small ray of sunshine peeking out from behind the lingering recession cloud, we find some encouraging news in the industry. Flight hours are increasing, used aircraft are starting to sell, and we see a resurgence in the continued consolidation of the FBO industry.

In the last couple of months, we have witnessed chain operators sell a couple of locations and sell one location to a competitor. We also saw the sale of a small chain to a larger chain. Therefore, I pose the proverbial question in the manner Harvard Business School types might ask: Is it time to “harvest” your business?

Only you can determine this. But if you’re getting into the sell mode, here are few things to keep in mind as you move forward.

Begin with the Business Plan

I’ve been involved in many FBO sale transactions over the years — both buying and selling various properties. The first order of business should always be to review your business plan. If your plan is in order, it will reveal the goals and objectives you have set for your business, which will help in the valuation of your assets.

Business plans we write for our clients include a section on exiting the business. Here the plan details a positioning strategy designed to maximize the value of your business whether you plan to leave a legacy to your family, retire with an income or just cash in with an outright sale.

Various sections discuss topics such as:

• A full- or part-time retirement scenario
• A succession plan to leave in place a strong management team
• Capital needs for the future
• Possible changes in the airport environment
• New business or personal opportunity
• Time to “cash in” — business has peaked

As part of the asset evaluation, you should be able to quantify the following:

• Current condition of your operating systems
  • Fuel operations
  • Accounting function
  • Facility maintenance
  • Ramps and hangars
  • Efficiency of employee team in place
  • Stability and diversity of your customer base
  • Measure of profitability
• Airport lease considerations
  • More than 10 years left?
  • Upcoming capital requirements for lease extension
  • Current lease is assignable to a new owner
  • Liability after sale on business and environmental issues
• Tax issues
  • Capital gains tax
  • Taxes on the sale
  • Get advice from tax experts
  • Review tax issues of buyer
• Legal and regulatory issues
• Current and proposed airport environment
• Identifying potential buyers

Sale Price Considerations

When consulting with clients who want to sell their FBOs, one of the first things they ask is: What multiple should I go for? Of course, they are referring to what the industry has conditioned them to expect: the “magic number” times the earnings before interest, taxes, depreciation and amortization (EBITDA). Or is it another magic number, such as EBIT, gross profit or even revenue?

I understand where they are coming from, but I caution not to get hung up on the multiple issue. Throwing around multiples like 5×, 10× and even 15× can quickly become a mental trap that often gets in the way of a true valuation of the business worth.

As our premise for this article indicates, the selling price of your FBO is not about the earning multiple but quantifying many of the questions we asked above. Some recent deals that have been consummated have no multiple. So what does that mean?

As you get into the pricing of your FBO, it’s imperative that you do a full-scale presale evaluation in order to further define and determine the terms gross profit, net profit and EBITDA. Because the eventual buyer will be doing his own due diligence, it’s important you do your own in advance so you can better understand the buyer’s valuation of your business.

Although you, as the owner, can have an understanding of the worth of your business, ultimately you can’t dictate what it is worth. Only the market can do that.

Develop a Selling Strategy

What is important to remember, if you decide to sell your business, is to seek professional assistance to walk you through the process, to help you properly position your business for sale. Also, an experienced professional can help you channel your efforts by identifying and targeting potential buyers.

For instance, one strategy would be to sell to one of your immediate competitors on your airport if one exists. Past experience says this will most likely give you the best deal.

Selling to your competitor allows the buyer to gain one of the most important business success factors: pricing power. (This can be a subject on its own merit and will be dealt with in another blog.) Suffice it to say pricing power will significantly increase the valuation of your business but cannot be so much that you make the transaction noncompetitive.

Ultimately, there are many factors that enter into the valuation decision. Businesses are sold for many reasons, and all those reasons affect the selling price. What both buyers and sellers must realize is that a satisfactory business deal for both parties must be concluded. Translation: Negotiate!

A purchase and sale agreement reached by the parties, if they succeed in reaching one, will be the result of bargaining. Depending on the relative bargaining positions of the buyer and seller, the purchase and sale agreement might reflect either compromise or capitulation, and, as a result, a valuation reasonable to the parties will be reached.

So don’t let the multiple trap get in the way. The multiple of earnings doesn’t really count in the transaction.  

Keep the goal in mind. The mission is not to simply conclude a transaction. The primary mission is to sell the business at a satisfactory price while guaranteeing payment is received when it is wanted and the way it is wanted.

John Enticknap

Before founding Aviation Business Strategies Group (ABSG) in 2006, John Enticknap was president of Mercury Air Centers' network of 21 FBO locations and has held executive management positions with DynAir Fueling and CSX Becket Aviation. He is an ATP- and CFI-rated pilot with more than 7800 flight hours, certified in both fixed- and rotary-wing aircraft, and the author of 10 Steps to Building a Profitable FBO.

Optimizing Your FBO, Part 1: Pay Your Front Line Employees More

“Hire the best. Pay them fairly. Communicate frequently. Provide challenges and rewards. Believe in them. Get out of their way and they'll knock your socks off.”

-- Mary Ann Allison,
American scholar and futurist

During our FBO Success Seminars we put on for the National Air Transportation Association (NATA) we do a segment called Optimizing Your FBO, particularly helpful during downturns in the marketplace.

By "optimizing," I’m talking about the decisions you make as an FBO owner or manager that can have a positive effect on your physical operations as well as your bottom line.

Often, when FBOs, and other businesses for that matter, are faced with an economic downturn, one of the first places they look to make cuts is their payroll. That might work if you are operating a clothing or grocery store, but take a moment and think about the time that has been invested in training your employees, especially the ones who are out there on what I call The Front Line, marshalling, fueling, and, most importantly, meeting and greeting customers.

These are the employees who have built a relationship with your customers. There is a certain amount of trust and comfort that a flight crew feels when someone familiar is handling the company’s most prized possession, the corporate jet. And if you are looking to increase your fuel sales at the point of transaction, who is in a better position to positively influence the sale: you or the line service technician or CSR?

If we are relying on them to be our front line sales force, why do we, as a group, pay them the least? In retrospect, we should be thinking about paying them more, not cutting back their hours, pay grade or even laying them off.

Ouch! We know this sounds counterintuitive, but let’s step back and look at your business.

Analyze Your Business

For the past several years, we have all seen the significant reductions in fuel sales, lower operations and the serious advent of contract fuel suppliers. These events, much out of our control, have reduced operations, margins and the number of hangar and based tenants. As good managers, we have been trained to analyze our business models, reduced expenses, cut capital improvements and prudently operate our business to maximize revenues and minimize our expenses.

From personal experience, I have seen owners of top-rated FBOs out on their ramps parking airplanes; owners doing what they need to do to continue in business. Yes, fuel sales have dropped on the average of 25 percent to more than 50 percent and more in some cases. No doubt some FBOs will not survive this downturn. So what can we do?

Invest in Your Employees

The key ingredient to your service business is to give the best service. This is not rocket science! We should invest in our employees; not only with a reasonable living wage and benefits, but also to provide a good foundation, training and support to be successful.

When you invest in people, they respond and perform well. In the book Profit at the Bottom of the Ladder, author Jody Heymann presents a “well documented lineup of businesses that have flourished in large part because their management practices include respecting and empowering their lowest paid workers.” For example, Jenkins Brick, a major U.S. brick manufacturer in Alabama, credits higher wages and profit-sharing with increased productivity and quality, as well as reduced turnover and fewer accidents.

Along with paying your front line team a livable wage, train them, and respect them. They will pay you and your business back by taking care of your customers. Ultimately, the customers will welcome the attention.

We know what you’re thinking: “This is a simplistic magic formula.” Of course not! It takes a constant balance of monitoring your business, your team and your customers. But the evidence is clear, pay your employees a living wage, train them, challenge them, and respect them.

And then get out of their way, for they just might knock your socks off!

Next blog post on Optimizing Your FBO, Part 2: Cross-Train and Outsource

John Enticknap

John Enticknap founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including as president of Mercury Air Centers. He is the author of 10 Steps to Building a Profitable FBO and developed NATA’s acclaimed FBO Success Seminar Series.

FBO Fuel Pricing: Seeking a Silver Bullet

Ever since the Lone Ranger first loaded his trusty six-shooter with silver bullets, I’ve been intrigued with the idea of formulating a single straightforward solution for pricing fuel at FBO operations I’ve managed over the years.

This search for the silver bullet is a subject we discuss at our FBO Success Seminars, and FBO managers in attendance often voice their concerns about how to effectively price fuel. On one hand, they’re concerned about the bottom line. On the other hand, they don’t want to price themselves out of the market and lose valuable customers in the process.

Indeed, it’s a two-edge sword. The trick is to maximize both cutting edges. Let me explain.

Maximize Your Customer Value Proposition

FBO managers are no different than any other business manager that sells a service or product. The same rules apply. Every FBO sells fuel — both Jet A and 100LL are the same specifications from all the manufacturers — so trying to differentiate your business on product is almost impossible. Same goes for quality control: Either it’s done well, or you’re going to be out of business.

What you need to look at is maximizing your Customer Value Proposition (CVP) — the facilities, the delivery (customer service) and the selling price. We’ll discuss the delivery aspect in future blogs. For now, let’s concentrate on the one factor many managers forget, or do not consider enough, and that’s the pricing equation, which requires putting some effort into research and calculations.

So let’s do the math. There are generally four types of pricing:

• Cost-Plus pricing
• Demand pricing
• Competitive pricing
• Mark-up pricing

Before we decide which type of pricing methodology we use, we need to determine our costs. We need to know what it costs to get the fuel truck with clean fuel to an aircraft on our ramp with a trained line service technician. (Let’s not get into a discussion here on fixed and variable costs. That’s another blog.)

Next, let’s look at our fuel cost from our supplier, including mark-ups over Platts (or rack price), plus transportation, plus fed taxes, plus flowage fees, plus state fees (not sales tax) and any other local fees. In today’s marketplace, that number is greater than $3 per gallon for Jet A.

Now we need to look at your cost of labor and overhead and covert the number to a per gallon rate.

After that exercise, let’s say we have our fuel cost at $3.10 and our cost of labor and overhead of $0.55 per gallon. So our cost is $3.65/gallon. (This example is for Jet A.)

But before we start talking about which pricing method to use, we need to do some research on your FBO marketplace. If we look at various publications and web sites, like acufuel.com, we can determine local and national fuel selling prices.

One current survey for national and regional pricing shows the following:

• Average high selling price: $6.66/gal. (range of over $7 to just under $6)
• Average low selling price: $3.64/gal. (range of over $5.40 to a low of $3.16)

This translates to a national average selling price of $5.05. In addition, find out what the local posted fuel pricing is at your competitor FBO and within a 50-mile radius of your base.

The other research question you need to tackle is: What are the contract fuel selling prices in your local area? Once you have this data, then we can look how we put a retail price on the fuel.

Maximize Your Profit Position

One of the most important tasks we must keep in mind is maximizing our profit position.  Profit is our friend. Profit is our goal.

In order to maximize our profit position, we rely on a standardized fuel pricing method. We think it is fair to say most FBOs use either cost-plus pricing or mark-up pricing. Cost-plus means you want to make a certain “plus” above your cost. For example, your cost is $3.65, and you want to make $1.00 per gallon. Selling price would be $4.65; a profit of 21.5 percent on sales.

Mark-up pricing, on the other hand, says you want to make $0.90 per gallon. Your selling price would be $4.55 or just short of a 25 percent mark-up on cost.

Both of these methods are common in the manufacturing business arena. The difference in these two methods lies in the difference in margin and mark-up. This can be a lengthy discussion, but suffice it to say, a thorough understanding of your costs of operation to include labor, facilities, other income, overhead, etc. affects what margin you use to show a profit, which in turn, allows you to calculate what mark-up percentage you must use to get to the intended profit level.

Demand Pricing

We might suggest a demand pricing method. Service industries use this pricing methodology consisting of:

1. Labor & Material
2. Overhead and
3. Profit.

You start by knowing what goal you have for gallon sales for the month. Establish your competitive average sale price within the range of the market of, say, 50-100 miles. Look at your fuel sales, each day, each week, and adjust your pricing on a daily, monthly or discount-per-individual-sale basis to meet your goals at the end of the month. Keep in mind, of course, what your financial break-even point is so you don’t end up selling for below cost. Demand pricing models are very complex and are used by firms such as airlines, cruise lines, freight carriers and others who sell perishable services.

Competitive Pricing

Competitive pricing comes into play with the contract fuel market. This trend has accelerated in the last couple of years. It has led to decreased margins on fuel sales. Has it increased your fuel sales to make up for the lost margin? That is always the claim from the contract fuel suppliers, which now include the major retail suppliers — a building dilemma for the FBO. At the FBO Success Seminars, we have a complete class on this important issue.

What’s Your Silver Bullet?

In the end, the Lone Ranger always prevailed and got his man. He did his homework, scouted the trail and, of course, he had his trusty six-shooter loaded with silver bullets.

For the FBO owner and manager, the silver bullet is knowledge. Know your customers, and know your business. It’s a thorough and detailed understanding of your FBO cost structure.

John Enticknap

John Enticknap founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including as president of Mercury Air Centers. He is the author of 10 Steps to Building a Profitable FBO and developed NATA’s acclaimed FBO Success Seminar Series.

Welcome to AC-U-KWIK's FBO Connection Blog

We would like to welcome you to AC-U-KWIK’s FBO Connection, a source for discussion, ideas and general conversation on the FBO business. Here you’ll find weekly 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.”

When AC-U-KWIK approached myself and business partner Ron Jackson about writing a blog for their new, enhanced electronic AC-U-KWIK Alert newsletter, we both felt honored to be able to contribute to the AC-U-KWIK heritage as the definite industry resource for Fixed Base Operation information worldwide.

After 40-plus years of working in the aviation fueling and FBO industry, including as president of Mercury Air Centers’ 21-location network, I was eager to share my knowledge of the industry to the FBO community. This was the genesis for establishing our company, Aviation Business Strategies Group, as a means for sharing, teaching and consulting with FBOs to help them become more successful.

Besides sharing our FBO expertise and experiences in this blog, Ron and I regularly teach a seminar for the National Air Transportation Association (NATA).

Nearly three years ago, NATA approached us about teaching a seminar based on our proprietary 10 Steps to FBO Success. So in the fall of 2008, we taught our first seminar on-board a cruise ship as it sailed the Caribbean to the Bahamas. This first seminar has now evolved into NATA’s acclaimed FBO Success Seminar Series, and we have conducted several “dry land” seminars with the next one scheduled for Indianapolis in April.

For AC-U-KWIK’s FBO Connection Blog, we’ll touch upon many of the winning strategies we teach in our NATA Seminars and a whole lot more. Each week we’ll peel back the onion to reveal what we consider to be seasoned FBO insider knowledge — the legal kind — aimed at educating and motivating FBO managers, supervisors and employees. To that end, we hope we don’t disappoint.

Since my expertise is in FBO Operations, I’ll be blogging on a variety of topics that fall out of our 10 Steps to Building a Profitable FBO. 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 Managing Your Fuel Pricing and Margins to finding “free money” hidden in you operation — and I’m not talking about the nickels and dimes found in the lounge sofa.

Ron, who has a considerable aviation public relations and marketing background, will be blogging about:

• How to Build Long-term Profitable Customer Relationships
• Making the Customer Your Best Friend
• and Marketing Your FBO on a Limited Budget, among other topics.

In addition, we have developed an FBO Customer Service Training Program titled The Ultimate FBO Customer Service Experience: “Don’t Forget the Cheese!” This is not your entry-level customer service training curriculum, which teaches the basics like Introduction to General Aviation and The Basics of Airport Operations. Instead, we teach members of your organization common sense customer service and how to add value to each transaction by simply “Adding a Little Cheese!” Sound intriguing? Stay tuned as we feed you some interesting cheese nibbles along the way.

Lastly, we will invite some guest bloggers in various areas of expertise including:

• FBO Law: Minimum Standards — Current Trends from Airport Leases
• FBO Insurance: Insurance Issues and Risk Management
• FBO Web Site Enhancement & Social Media: Developing Streaming Videos, Optimizing Your Site and the Value of Communicating via Social Media
• FBO Finance: FBO Accounting: “The Good, Bad and Ugly”
• FBO Construction: Keeping on Time and Within Budget on Hangar and Terminal Projects

Ron and I look forward to reaching out to you each week through this blog and connecting on everyday issues that affect the bottom line of your FBO operations. If we happen to hit on a subject that you’d like to comment on, or if you want us to address a certain issue, please let us know by sending an e-mail.

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

John Enticknap

John Enticknap founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including as president of Mercury Air Centers. He is the author of 10 Steps to Building a Profitable FBO and developed NATA’s acclaimed FBO Success Seminar Series.

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 is the author of Mission Marketing: Creating Brand Value and co-author of Don’t Forget the Cheese!, the ultimate FBO Customer Service Experience.