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