FBO chains: big three secure monopolies at major airports

 - March 27, 2009, 9:35 AM

When jet-A prices spiked last year after oil prices rose to new highs, pilots complained that the large FBO chains were taking advantage of monopoly locations to extract stiff per-gallon prices and high ramp fees from jet-A-buying customers. It’s true that prices rose, in some cases above $8 per gallon at some locations where sole FBOs are the norm. It is also true that some airports have only one FBO, whether because of local airport authority constraints or because there isn’t enough business to support more than one FBO. But were complainers correct that the big chains are monopolizing well traveled airports?

Before looking at the data, it is interesting to note that even the big chains aren’t immune to pricing pressure. The spike in oil prices and the sorry state of the economy have affected the amount of flying being done, and FBOs report reduced margins on fuel sales due to the slowdown in business; some have laid off personnel.

Even Signature Flight Support, widely accused of over-charging for fuel and ramp fees, has adapted by lowering prices and selling fuel to customers of contract fuel programs offered by Avcard and Avfuel.

Although many major airports have only one FBO, in these areas there are plenty of other choices where pilots can buy fuel much more cheaply and enjoy equally comfortable facilities, and passengers don’t have to travel much farther to reach their ultimate destinations.

Major U.S. cities with airports where there is only one FBO include Atlanta; Baltimore; Boston; Chicago; Denver; Detroit; Milwaukee; Minneapolis; New York; New-ark, N.J.; Philadelphia; San Francisco; San Jose, Calif.; and Washington D.C. (not including Dulles). Each offers plenty of local alternative airports where multiple excellent FBOs compete vigorously for business and where fuel prices and fees are lower.

The map, availabe in the link below, includes only the big three FBO chains–Atlantic Aviation, Landmark Aviation and Signature Flight Support–and their bases in the U.S. where each company has monopoly locations. Some non-branded FBOs owned by or affiliated with the big chains are also not listed. Signature Flight Support parent BBA Aviation, for example, owns four Executive Beechcraft facilities, but those don’t share the Signature Flight Support brand. Atlantic owns FBOs in Alaska that haven’t been rebranded under the Atlantic banner.

The tally of monopoly FBOs is 25 Atlantics, 17 Landmarks and 14 Signatures.

Although Atlantic leads the chains in the sheer number of sole FBOs, Signature has more sole-FBO locations at major airports, so pilots’ complaints about lack of choice at large airports may have some foundation. Landmark is interesting because it has no monopoly FBO at any major metropolitan airport, unless we count San Diego, where Landmark purchased the former Jimsair facility.

Are monopoly FBOs a problem for aircraft operators–able to charge too much because they have no on-airport competition? That depends on how close the airport is to the passenger’s ultimate destination. Pilots are willing to shop around for favorable fuel prices, and sometimes all it takes is suggesting to the passengers/owners an alternate but convenient airport. Jet-A prices and ramp fees at the alternate airports are often dramatically lower.  



For a list of the locations of all the FBOs of the big three FBO chains, go to www.ainonline.com/resource-center/.