It was almost painfully uncomfortable. The recently hired customer service representative was up to her belt buckle in alligators, all the line techs were missing, her line chief was deep in conversation with an important customer and everyone else from management was in a meeting off site.
Meanwhile, the captain of a transient charter turboprop was waiting patiently to place his fuel order, and he had a fairly simple question. He asked if the FBO had a ramp service fee, and if there was a minimum fuel order that would waive the fee. But she wasn’t grasping his question, calling several times on her walkie-talkie and repeating–loudly and somewhat frantically, for everyone to hear–“The guy with the Conquest wants a discount.”
The charter crew was beginning to lose patience because the line tech who had marshaled them to their parking place had promptly disappeared. That left their passenger on the apron to lug his golf clubs while hunting for the one unmarked door that led through a storage hangar to the terminal lobby–which was very nicely appointed.
Everything got sorted out eventually, but not before the charter captain rolled his eyes a couple of times, making a mental note never to return. The entire episode was like a training film illustrating all the mistakes that well-meaning people who are undertrained and understaffed can make.
Raise your hand if this situation sounds familiar.
It’s not clear how widespread such activity is, but training and staffing are key issues for the FBO industry. While avoiding situations like this one is vital to long-term success, the overriding concern is safety–not just guarding against bodily harm, but reducing financial losses through “minor” ramp accidents.
The National Air Transportation Association (NATA), in partnership with insurance companies, has directly addressed the issue. Circulars are available that can itemize the exorbitant costs resulting from an incident as “minor” as backing a linen truck into the leading edge of a small or midsize corporate jet. (There are the costs to repair the damage; to charter an aircraft to use during downtime; diminution of value due to damage history; and more.)
The latest adjunct to the Safety First training program is NATA’s Safety Management Program, designed to create an industry-wide database of information on all accidents, incidents and other losses that can help generate standards and programs to mitigate the risk across the board. The stated goal of the Safety Management Program is to reduce ground-related accidents by 50 percent over the next five years. NATA has retained consulting firm Simat Helliesen & Eichner (SH&E) to help develop the program. SH&E has experience carrying out high-level assignments for airports, airlines, repair stations and FBOs worldwide.
NATA president James Coyne said that the program is designed to generate a culture of zero tolerance, in which safety on the ground equals that in the air. “The Safety Management Program is for FBOs, charter operators, maintenance and flight-training providers and airline-service companies,” said Coyne. “NATA will create a Web-based program whereby any company can securely manage its internal safety reporting and analysis without needing to create its own software.”
One of the first priorities of the initiative is to create a mechanism for benchmarking accidents and incidents. Coyne said that, for the first time, all major aviation insurers have indicated a willingness to work with the association to create a database to track claims and benchmark progress.
Claims information will be gathered quarterly, and analysis will be disseminated to the industry. The database is designed to track previously unavailable ground-accident data, such as time of day, weather, levels of ramp traffic and so on. Categorizing ramp accidents is a first step toward creating a baseline of what such accidents cost the industry. From there, NATA hopes to be able to substantiate how much safety programs are saving.
Some major stakeholders are supporting the program with money and manpower. They include United States Aviation Underwriters; Global Aerospace; Phoenix Aviation Managers; W. Brown and Associates; XL Aerospace; ExxonMobil; ConocoPhillips; and AirBP Aviation. Other major stakeholders are expected to join the effort shortly, Coyne said.
The Department of Homeland Security is still getting accustomed to its role as the new 800-pound gorilla inside the Washington beltway. To date, most of its attention has been focused on airlines. General aviation businesses–including FBOs, charter providers and independent Part 91 operators–continue to await concrete guidelines or new rules regarding security, fearing the worst while hoping for the best.
For example, Wilson Air Center is configuring its new hangar/building complex at Memphis International Airport to accommodate future needs for security on the cargo side of the ramp. Vice president David Ivey told AIN, “We anticipate there could be issues with cargo handlers having access to airside portions of cargo loading areas. We’re planning our new buildings with an eye toward establishing a system where cargo can be efficiently offloaded from trucks on the streetside, then loaded onto aircraft on the ramp without compromising security buffers.”
Airline Service Opportunities
It has to be significant that this year’s incoming NATA chair comes from the airline service side of the industry. Sally Leible likes the synergy she sees between general aviation FBOs and airline service companies on airports. She also sees good levels of cooperation in dealing with airport authorities as a unified entity rather than coming from separate directions.
But also of interest is her assertion that the current airline fiscal crisis will generate opportunities for new business on the general aviation side of the airport. As airlines struggle to control bottom lines, they are outsourcing more and more work that previously was conducted in house. That may include baggage handling, into-wing fueling, de-icing, even customer check-in at the terminal. One area in which some FBOs have looked into airline opportunities is servicing ramp vehicles such as tugs, hydrant refuelers and baggage conveyors.
As Leible works her way through her 12-month term as chair of NATA, it will be interesting to see how much more crossover there is between FBOs and airlines on airports that serve both segments of aviation.
Many FBO executives express concern about the effects of high fuel prices on the economic recovery. With crude oil still topping $50 a barrel at press time, there is no near-term recovery in sight. Many FBO managers have mentioned that they are seeing new strategies evolve to maintain profit margins.
John Mason, director of FBO services for Jet Aviation in West Palm Beach, Fla., told AIN he’s seeing an uptick in posted retail fuel prices nationwide to offset the heavy discounting. He said pilots used to roll onto the ramp without asking about fuel price, but now, he said, “I’m on the phone all day doing fuel deals.”
What’s Your FBO Worth?
For those with an eye to cashing in on a lifetime of work building an FBO business, now might be a good time. There appears to be strong interest in the general aviation service industry from financial advisors. They see good opportunities in the line service business, and maybe better financial promise in the maintenance side.
Mark Chambers of the Aviation Resource Group International told AIN that maintenance providers offer a steady flow of business that is predictable–more so today than ever before with computerized maintenance service plans for engines and airframes. “There’s less room for variation in maintenance,” he said, because aircraft operators might curtail flying hours in lean times, but major maintenance events are scheduled months or years in advance, with little chance they will be canceled or postponed.
As to whether the aviation service industry is as ripe for consolidation as some financial analysts believe, Signature Flight Support president Beth Haskins agrees that the industry is “fragmented.” She told AIN, “When the largest player has only 10 percent of the North American market, you’d have to say that’s a very fragmented industry.” Of course, her company is the “largest player” to which she referred.
But Haskins recognizes that the reason the industry is diverse is because it was established by independent operators who know and understand their local clientele and the economic and political minutiae of their airport. For that reason, the Million Air Interlink model of establishing a national presence through a common name and common standards establishes many of the advantages of consolidation.
At the same time, the franchise-owner aspect of the Million Air program ensures that the sense of personal attachment and commitment to the success of the business remains. Along with that comes the incentive to go the extra mile to market the facility and general aviation at the airport–and to fight the legal and political battles that seem to be so much a part of operating a general aviation business today.
Over the past decade or so, the FBO industry has consolidated in the form of some medium-size chains that have emerged as significant players. TAC Air, SheltAir and Galaxy have established networks of several facilities each–and they always report they are on the lookout for more. Each has its own reason for bringing more FBOs under the corporate roof, but economy of scale is certainly one of the economic draws.
Bob Wilson, founder of Wilson Air Center, recently added the FBO at Charlotte-Douglas (N.C.) International Airport to his award-winning company. Ivey told AIN, “Bob’s business model has always been to have between three and five FBOs. That provides economy of scale without losing control of the product.” In short, when you get spread too thin, there’s too much danger of a company’s integrity slipping through the cracks.