Essential Fuel Supplier Agreement Elements: Term of Agreement, Pricing Methodology, and Transportation and Delivery

Detailing the 10 Essential Elements of a Favorable Fuel Supplier Agreement, Part 1

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

In our last blog post, we introduced our new series on the 10 essential elements of a favorable fuel supplier agreement which is one of the six intangibles that can build equity in your FBO.

For this blog post, we'll break down three of the favorable fuel supplier agreement elements and provide insight and tips to help you protect your business while adding intrinsic value.

Before we detail each of these elements, it is important to understand that you should act in your own best interest by first going out for competitive bids to several fuel suppliers. This will give you a better understanding of the parameters set by each fuel supplier and which incentives are available that may help you in your negotiating process.

Term of agreement

In a nutshell, you should protect your enterprise from engaging in an agreement that is excessively long in order to maintain flexibility within an ever changing industry landscape. As you grow your business, and in particular your fuel volume, you can gain leverage by keeping the term of your fuel supplier agreement within a three- to five-year period. You may find that you can obtain a better fuel price by a longer-term agreement, but you may lose the desired flexibility that a shorter term provides.

Pricing methodology

Understanding fuel pricing methodology will increase your odds of negotiating a favorable agreement. If your FBO is pumping at least 300,000 to 400,000 gallons per year, you should be able to get a contract that has an index-based pricing formula. That way, you can negotiate the differential fee to be paid to your supplier. The differential is the profit margin that the supplier will be receiving on each fuel purchase by the FBO. Unbundle your pricing structure so you know each cost element. For example:

• Index price
• Differential
• Transportation
• Federal taxes
• State and local taxes
• Flowage fees at the airport

This pricing formula applies to Jet A purchases. Avgas pricing, on the other hand, is determined at the time of purchase.

Transportation and delivery

Don't overlook or downplay this element, for there are savings that you can negotiate. First, you need to know the primary terminal and secondary terminal where your Jet A fuel and Avgas will be picked up by the transportation company. Delivery should favor your FBO schedule, such as at night or during the slow periods during the day. This will optimize time for quality control to be completed efficiently.

Also, obtain proposals from multiple transportation firms. Although they must be approved by your supplier, this can benefit your effort to minimize costs. After all, you, as the FBO owner/operator, are the ultimate customer. You should also determine any extra charges, such as delays in delivery, extra charges for high cost of fuel or other fees. Although extra charges for high cost of fuel are not an issue in today’s market, they have been in the past.

As we work through each of these elements, please keep in mind that there are many factors and nuances that we will not be able to expound on in the framework of a blog. Therefore, we encourage you to attend one of our NATA FBO Success Seminars where we spend additional time and discussion on these important topics as well as others.

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.

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NBAA from an FBO Perspective

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

The 2015 NBAA Business Aviation Convention & Exhibition is now in the books, so let's break down the show from an FBO perspective.

With more than 27,000 attendees and over 1100 exhibitors, the show was very lively, and most FBOs exhibiting said they were pleased by the amount of traffic and activity at their booth. In general, the atmosphere was upbeat with several OEM airframe manufacturers introducing new aircraft and reporting healthy orders to help fill their delivery slots going forward.

The one lament that FBOs seemed to repeat was that business jet operators continue to tanker fuel from their home base resulting in only courtesy fuel buys.

As in the past, many look with anticipation to hearing the results of Honeywell Aerospace's Annual Global Business Aviation Outlook, which is traditionally released at the annual NBAA show. Here's a look at some relevant predictions.

First of all, Honeywell states that “as a slow-growth economic environment takes hold across many global markets, the business aviation industry is not immune to its impact."

In past blogs, we've talked about the slow-growing economy and our Annual FBO Fuel Sales Survey backs up this statement. We are seeing some bright spots in select markets while fuel sales continue to grow at a slow pace.

As for new business jet deliveries going forward, Honeywell forecasts up to 9200 new business jet deliveries worth $270 billion over the next 10 years. This is actually a downgrade of 3 to 5 percent over the value noted in its 2014 forecast.

The reason we look at new business jet deliveries is that it's a leading indicator of the need by business jet operators either to replace or upgrade their existing aircraft or to expand their current uplift capability.

Another indicator we watch closely is the used jet market to see if inventories have risen or diminished. This gives us another barometer with which to measure and monitor the current health of the business jet industry.

Honeywell's findings indicate a used business jet market that has stabilized at 10 percent of the existing fleet up for resale, which is significantly down from the 16 percent high-water mark recorded in 2009.

According to Honeywell, operators responding to their survey increased their used jet acquisition plans by about 4 points, equating to 32 percent of their fleets in the next five years. For FBOs/MROs who specialize in avionics and cabin upgrades, this is good news.

Other key global findings in the 2015 Honeywell outlook include:    

• Operators surveyed plan to make new jet purchases equivalent to about 22 percent of their fleets over the next five years as replacements or additions to their current fleet.
• Of the total new business jet purchase plans, 19 percent are intended to occur by the end of 2016, while 17 and 20 percent are scheduled for 2017 and 2018, respectively.
• Operators continue to focus on larger-cabin aircraft classes, ranging from super mid-size through ultra-long-range and business liner, which are expected to account for more than 80 percent of all expenditures on new business jets in the near term.
• The longer-range forecast through 2025 projects a 3 percent average annual growth rate despite the relatively flat near-term outlook as new models and improved economic performance contribute to industry growth.

As we have written previously, the business jet market and the FBO industry is operating in what we are calling a new normal where the U.S. business economy is slowly growing. Increased tankering of jet A fuel by medium and large business jet operators is also part of the new normal. We have heard from Fortune 500 corporate aircraft operators that they tanker up to 70 percent of their fuel from their own corporate tank farm.

Therefore, it's important for FBO operators to provide excellent customer service in order to enhance and increase fuel sales at the point of transaction. FBOs should also look at ways to increase and diversify potential revenue streams in order to garner a greater share of the customer wallet. We will have more on this topic in future blog discussions.

If you attended NBAA, please give us your perspective in the comment section below.

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.

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10 Critical Elements of an FBO Airport Lease

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

As part of a new blog series, we'll take each of the six intangibles that can build equity in your FBO and give you valuable insight as well as insider tips to help you add intrinsic value to your business.

Starting at the top of our intangible list, developing a long-term lease with your airport authority is the lifeblood of your FBO operation and plays a large part in building equity in your enterprise.

The critical elements of a lease to understand, and that are a part of the negotiating process with the airport authority, include the following:

1. Term and option years
2. Operating rights
3. Payments, including rental, gross revenue, flowage fees and out years to include escalators
4. Building/ramp maintenance responsibilities
5. Assignment sale clause
6. Termination from FBO and lessor
7. Improvements, new buildings and renovations
8. Insurance, indemnity and hold harmless agreement
9. Environmental liability

The tenth critical element, an Airport Minimum Standards document, should be part of your lease. We consider this one of the main six intangibles and will treat this as a separate subject in a future blog because it is a very important component with distinct elements.

In our next blog, we will break down these components with some additional tips to help you negotiate the optimum lease. 

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.

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Six Intangibles That Can Build Equity in Your FBO

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

Running a successful FBO operation requires attention to six intangibles. Reaching favorable terms and taking care of these intangibles the right way will help build equity in your business.

If you’ve ever gone to a bank to get a project financed, you know that it takes a savvy banker who understands the FBO business to get the project done. Most lending institutions can’t get over the first hurdle when they discover that an FBO doesn’t own the land where a proposed hangar is to be built.

To be sure, the FBO business is relatively unique. Often airports require FBOs to make major capital improvements as part of their lease, especially at time of renewal or in granting a request for a lease extension. Yet, at the end of the lease, none of the improvements are tangible assets that an FBO operator can liquidate. They are owned by the airport, which also owns the land.

Besides some ground service equipment, a typical FBO doesn’t have much tangible collateral.  The real value bankers or investors are interested in is mostly the intangibles that help increase equity in an FBO enterprise. These include:

1. A long-term lease with extension options.
2. A favorable fuel supplier agreement.
3. Advantageous/profitable hangar contracts/agreements.
4. A sound balance sheet with consistent EBITDA performance.
5. A strong Airport Minimum Standards document.
6. A strategic business, operational and marketing plan.

In coming blogs, we’ll discuss each of these and make recommendations on how to improve the equity in your FBO.

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.

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Great Customer Service. The Universal Language Spoken Everywhere.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

About the bloggers:

John Enticknap has more than 35 years of aviation fueling and FBO services industry experience. Ron Jackson is co-founder of Aviation Business Strategies Group and president of The Jackson Group, a PR agency specializing in FBO marketing and customer service training. For more background, visit the biography page or www.absggroup.com.

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

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

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

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

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

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

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

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

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

The Changing FBO Business Model

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

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

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

We hear all the usual arguments: high cost (by the way, it has always been costly to learn to fly), poor flight instructors, old slow aircraft, etc.

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

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

Pilot Retention

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

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

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

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

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

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

About the bloggers:

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

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

Originally Published on March 24, 2011.

FBO Operations Tip of the Week: Differentiate Your FBO on Customer Service, Not on Price

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

Note: Join John and Ron at NBAA Schedulers & Dispatchers Conference. Full details.

Many FBOs have gone out of business by lowering their prices during prolonged periods of time. 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 one FBO from another is to offer an outstanding and memorable customer service experience. This is a fundamental shift in the FBO industry away from a price-sensitive business model to one based on providing exceptional customer service.

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.

Research indicates that loyal customers don’t stop doing business with a company solely because of price, but rather because of a poor customer service experience. However, most will return if you recognize and fix the problem.

One of the ways to improve the customer service experience is to standardize training and look for ways to motivate employees in a way where they take ownership of problems when they arise. An example of a standardized training system is the Don't Forget the Cheese! customer service training program written specifically for the FBO industry.

About the bloggers:

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

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

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 Operations Tip of the Week: Cross Train and Involve all Employees in the Customer Experience

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

For most FBOs, employees must learn to multitask. In evaluating FBOs that are consistently successful, we find employees do many different job functions that result in not only a more efficient operation but it actually helps employee morale and adds to the customer service experience. As we like to say, a happy employee, a happy customer.

The result can be a very contagious working environment that gets noticed by the customer. Plus, cross training makes all employees more valuable and better motivated.

Here are some ideas:

• Train your CSRs to meet and greet arriving aircraft. You’re probably already paying the workers’ compensation rate for ‘ramp’ on the CSRs. 

• Train your CSRs and building maintenance staff to be wing walkers. Tip: Having two wing walkers, especially in hangar movements, can decrease your accident incident rate and could help lower your insurance premium. 

• 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. 

• Consider having your A&P technicians meet, greet and take part in the customer’s maintenance project experience. Once the inspection is completed, the A&P should be part of the discussion with the owner on what is to be fixed. This seems obvious but is 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 overall learning experience.

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 Operations Tip of the Week: Maximize Your Profit Position

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

As FBO operators and managers, one of the most important tasks to keep in mind is maximizing your profit position.

In order to accomplish this, 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 today is approximately $2.25 per gallon and you want to make $1.50 per gallon. Therefore, simple math puts the selling price at $3.75 resulting in a profit of 40 percent  on sales. 

For a mark-up pricing example where you want to make $1.35 per gallon, your selling price would be $3.60 per gallon, or just short of a 60 percent mark-up on cost.

Both of these methods are common in the manufacturing business arena. The variance in these two methods lies in the difference between 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. This, in turn, allows you to calculate what mark-up percentage you must use to get to the intended profit level.

We discuss these fuel pricing methods in greater detail at our NATA FBO Success Seminar, which is scheduled for March 9-10 at the Sands Expo and Convention Center in Las Vegas. 

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 Operations Tip of the Week: With Fuel Prices Falling, Guard Your Optimism

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

 
As the price of auto gas falls almost daily, we wonder how the corresponding drop in Jet A fuel might affect the FBO business.

Just four weeks ago, OPEC indicated they would stabilize a barrel of oil at $60. Currently, a barrel of oil is hovering around $54. Comparatively, at the beginning of 2014, index pricing for Jet A was around $3 per gallon. In December we saw roughly $1.60 per gallon resulting in a $1.40 swing. 

This begs the question: Will aircraft operators take advantage of lower fuel prices and start flying more resulting in more gallons being pumped at FBO locations?  

Based on our research and other industry discovery work, the answer is no, at least not in the short term. 

For the most part, flight departments, with FBOs following suit, have adapted over the past few years to what we call the new normal. While operators have right-sized their aircraft fleet and supporting flight crew personnel, FBOs have resized and streamlined their operations to meet the corresponding demand.

That’s not to say the industry will not benefit in the long term by lower fuel prices. Certainly, if lower fuel prices persist and the result is a more robust economy, aircraft operators will make the necessary adjustments by adding capacity and flight scheduling flexibility.  

But let’s not get ahead of ourselves. Just as it took months, even years, to get where we are now, the effects of an economic recovery on businesses operating aircraft will be slow to take place.

In the next few weeks, we will conduct our Annual FBO Industry Survey, which examines both past years’ performance as well as a look at current trends and predictions for 2015. In addition, we will probe FBO owners and operators to get a feel for their confidence in the economy going forward. 

In the meantime, lower fuel prices will give us at least a temporary reason to be optimistic. However, we can expect a continued sluggish market into the first quarter of 2015 with perpetual swings in fuel pricing and no appreciable increase in flight hours.

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 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