Epic, Air BP Forge New Paths after Licensing Agreement Ends

 - June 1, 2012, 5:55 AM
Privately owned fuel distributor Epic Aviation is rolling out its own branded FBO network this summer.

Moving on from the February dissolution of a decade-long licensing agreement, Epic Aviation and Air BP are continuing to make strides in different directions. Epic, a privately owned fuel distributor known previously as Valley Oil, had acted as Air BP Aviation Services since the 2002 formation of a joint venture company with the oil company and managed the 300-location Air BP FBO network and its programs. Last year, BP sold its share in the joint venture it shared with Epic to the fuel distributor’s privately held parent company Downstream Aviation, giving Downstream 100-percent control of the business.

As the licensing agreement expired by mutual decision in February, it seemed that each side wanted more of what the other had. While Epic had aspirations of expanding its general aviation services internationally, it could not use the Air BP name since the fuel provider operated its own network abroad and the Epic name did not carry the same recognition in general aviation. BP, on the other hand, was considering how to reclaim its Air BP brand in North America and eliminate “the middle man,” in the face of predicted future industry expansion.

While many in the industry believed that BP would simply withdraw from the North American general aviation market in the footsteps of other major refiners such as Texaco and Chevron and most recently ExxonMobil, just one day after the release of a brief statement from Epic announcing the end of the licensing agreement, BP revealed that it was entering the U.S. general aviation business as a direct fuel supplier to FBOs, business aviation companies and other direct aviation customers coast to coast. “The U.S. general aviation market alone for jet-A and avgas is close to 1.5 billion gallons [U.S.] per year, which is more than the rest of the world combined,” said David Wade, vice president of Air BP North America, while explaining the petroleum giant’s decision. “The FAA is forecasting GA fuel consumption to grow at 4.8 percent between 2010 and 2020, so that’s exciting to us.”

While BP is still formulating its plans to exploit the opportunity it sees from its rivals’ exits, it has not discounted the idea that it might start a domestic Air BP FBO distribution network, this time under its own control. In the meantime, the company told AIN that its immediate focus is on direct sales to customers such as corporate flight departments that have their own fueling capability, and those that fly internationally to leverage its existing global network.

Epic Plans FBO Brand

Epic expects to conclude the rebranding of the former North American Air BP network FBOs to its own Epic brand later this summer. The Oregon-based company began considering the pros and cons of rebranding two years ago, around the time of BP’s Gulf of Mexico oil leak, said Steven McCullough, Epic’s senior vice president of business development and strategy. “We had an open, candid conversation about ‘what if’ because we at the time had no idea as to the extent of brand damage done.” Based on discussions with its customer advisory council, Epic realized that customers no longer considered having a fuel brand affiliation as important as they once did. “More or less their feedback was ‘Guys, don’t hitch your wagon to another major [oil producer],’” noted McCullough, who said Epic’s clients cited the recent exodus from the space by top oil producers, or the potential for another environmental accident for their reasoning. While the change has so far been smooth overall, the company does expect some bumps. “I’m not going to paint a picture that it will be a perfect transition,” McCullough told AIN. “We’ll lose some customers probably that we’d rather not lose, [but] I think we’ll pick up some customers as a result of a new look and feel and direction.”

In breaking down its FBO clientele, Epic determines internal ranking based on fuel volumes. A “Tier I” FBO pumps an average of 1.8 million gallons a year, while Tier II moves more than 800,000 gallons annually. Based on those criteria, the fuel distributor claims 43 Tier I and II customers among its approximately 322 network FBOs, and said those 43 FBOs account for 60 percent of the company’s general aviation fuel volume.

As the rebranding moves into full swing, the fuel distributor’s recent alliance with flight-planning provider Universal Weather & Aviation will soon bear fruit. As Epic searched for ways to increase its value and attract more top-tier FBOs, company president and CEO Max Narro said Epic considered entering the flight planning and logistics business itself, but in the end decided instead to partner with a proven market leader to increase value to the network. “Universal has not only the market share but also the influence to direct traffic to better serve the customers,” Narro told AIN. Each side brings its own strengths to the partnership. Epic has a well established North American FBO network, while Universal has ties to many corporate flight departments as well as international flight handling capability.

As further development of the new partnership, Epic will roll out a premier brand this month among its 300-plus affiliate FBOs known as the UVair FBO Network, which will debut at more than 20 airports. The first locations announced are Edwards Jet Center in Billings, Mont.; Stevens Aviation in Greer, S.C.; Ambassador Aviation in Dallas; Bizjet International in Tulsa, Okla.; and Million Air Vancouver in Richmond, British Columbia. These FBOs, selected for their level of amenities and their safety records, will provide additional customer services and drive increased aircraft traffic, according to the companies. “UVair FBO Network members will benefit by having access to UVair’s 25,000 worldwide card holders,” said Greg Cox, senior vice president for UVair, adding that cardholders will also receive automated processing as well as the opportunity to participate in Epic’s rewards program.

After conclusion of its agreement with BP, Epic announced the creation of a joint-venture agreement with China’s National Aviation Fuel Group (CNAF), the country’s largest aviation fuel provider, to develop a general aviation services network, a deal Epic views as a cornerstone in its plans to increase its footprint beyond North America. “China is a big carrot for now, attracting the right partners for the rest of the international market,“ said Narro. “We have a strong asset on the table.”