FBOs to Compete on Service, Not Price in 2013 - Steady 6% Growth Forecast for FBOs
/By John L. Enticknap and Ron R. Jackson
Principals, Aviation Business Strategies Group
Recently, we attended the National Business Aviation Association’s (NBAA) Schedule and Dispatchers (S&D) Conference in San Antonio. While there, we had the opportunity to address a group of FBO leaders regarding the present state of the industry and where we saw the future headed in 2013.
Throughout the year we have many opportunities to talk with FBOs from various parts of the country. At the NATA FBO Success Seminar, we conduct twice a year, we network and exchange ideas and information with FBO owners, operators and managers. Also, we receive feedback from this blog we write for AC-U-KWIK FBO Connection.
In addition, we attend various aviation shows including the annual NBAA Meeting and Conference as well as the S&D, and we review industry information and forecasts released by a number of companies and organizations including:
• Honeywell’s Global Business Aviation Forecast
• FAA Aerospace Forecasts
• GAMA
• JETNET
• ARG/US
• NBAA
2013 Forecast
To summarize our findings, the FBO industry has not fully recovered from the economic downturn of the past several years. Yes, 2012 was a better year than 2011, but there has been a modest shakeout of FBOs who have been operating marginally.
Going forward, airframe manufacturers are starting to see a recovery in their orders for new aircraft and used aircraft inventories are starting to shrink. The industry is forecasting a slight uptick in the number of hours flown by corporate flight departments and charter operators. However, more efficient aircraft and the practice of tankering will make 2013 another challenging year for the FBO industry.
In general, what we find is a more positive business outlook for FBOs. To be sure, confidence in the economy is rising. Many are seeing more activity on their ramp than a year ago and a slight increase in the number of gallons being sold.
We feel most FBOs have an opportunity to grow their business in the range of 4 to 6 percent this year. If an FBO achieves a growth of 6 percent or more, they will be a star performer.
One of the biggest challenges for FBOs in 2013 will be competing for business aviation transient traffic. Although being competitive with fuel prices is important, FBOs can’t afford to heavily discount Jet A and then give away their ancillary ramp services - while trying to maintain a first class facility.
As we discuss during the FBO Success Seminars, FBOs competing on an aggressive fuel discount pricing strategy is an archaic way of doing business. In today’s tough business climate, FBOs are operating on very thin margins, yet the cost of doing business continues to rise.
Therefore, in order to stay in business, FBOs can’t afford to sell fuel at heavily discounted prices. No one wins with this strategy.
Competing on Service
Many FBOs have gone out of business by lowering their prices over an extended period 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 to differentiate is to offer an outstanding and memorable customer service experience.
Therefore, for 2013, we see a 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 correct the problem.
One way to improve customer service is to standardize training and aim to motivate employees in a way that encourages them to take ownership of problems when they arise.
Here are suggestions for improving your customer service experience:
• Standardize your customer service training.
• Empower your employees to own their mistakes.
• Teach employees to deal with customer dissatisfaction.
• Motivate your employees to work together as a team.
• Measure your customer service delivery with a short survey.
• Ask the customer the really tough question: Would you recommend us?
• Monitor your loyal customer database. If you haven’t seen a regular customer in a while, find out why.
Just like a restaurant owner, you have to be there for the customer. Empowering your employees to own their mistakes at the time of transaction is crucial. Teaching them to effectively deal with customer dissatisfaction helps make for a long-term profitable customer relationship.
At our next NATA FBO Success Seminar, March 11 and 12 in Las Vegas, we go into detail regarding each aspect listed above in developing an effective customer service training program. If you would like more information on this acclaimed seminar, please click here.
If you would like more information on our Don’t Forget the Cheese© Ultimate Customer Service Training Program, please click here.
Your feedback is important to us. Please, let us know your thoughts on subjects covered in our blog by emailing John Enticknap at jenticknap@bellsouth.net or Ron Jackson at Ron@thejacksongroup.biz.
About the authors:
Ron Jackson
Ron Jackson is Co-Founder of Aviation Business Strategies Group and President of The Jackson Group, a PR agency specializing in FBO marketing and CSR training. He has held management positions with Cessna Aircraft and Bozell Advertising and is the author of “Mission Marketing: Creating Brand Value” and co-author of “Don’t Forget the Cheese!” the ultimate FBO Customer Service Experience. Ron co-developed NATA’s acclaimed FBO Success Seminar Series and writes an industry blog for AcUKwikAlert.com titled: The FBO Connection.
John Enticknap
John Enticknap founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including President of Mercury Air Centers network of 21 FBO locations. He is an ATP and CFI rated pilot with more than 7,800 flight hours and is the author of “10 Steps to Building a Profitable FBO”. John developed NATA’s acclaimed FBO Success Seminar Series and writes an industry blog for AcUKwikAlert.com titled: The FBO Connection.