AIN Blog: Under New Management: The FBO Market Continues To Heat Up

 - November 21, 2013, 7:30 AM
Landmark Aviation's temporary signage goes up on the former Panorama Flight Support at New York Westchester County Airport
Landmark Aviation's acquisition of the former Panorama Flight Services at Westchester County Airport is just the latest salvo as the FBO consolidation market continues to heat up.

Apparently it is no longer enough to have just one FBO at an airport, as first Signature Flight Support and now Landmark Aviation have demonstrated at Westchester County Airport. Earlier this year, Signature announced its intention to purchase the Jet Systems FBO at the airport. With that FBO added to its current holdings, Signature would boast the largest footprint of any provider at the New York City-area dual-use airport. Earlier this month, Landmark countered with the announcement that it had acquired Panorama Flight Support, the last of the independent service providers at the airport.

At the beginning of this year there were five separate FBOs in operation at HPN; now there would be as few as three (Million Air White Plains would be the third) if and when the Signature deal is approved by the Westchester County Board of Legislators.

This consolidation is merely symptomatic of the recent heating up of the FBO real-estate business. Over the past few weeks alone, Atlantic Aviation acquired highly rated Hangar Ten Aviation Services at Kansas City Charles B. Wheeler Downtown Airport; Million Air added its first Florida base with the purchase of the former Avion Jet Center at Orlando Sanford International; and Ross Aviation (the stealth FBO chain that retains the original names on its now 17-strong FBO network) stepped up to the plate with the joint purchase of Western Edge Aviation at Sloulin Field International Airport in Williston, N.D., and the outright acquisition of Chester County Aviation at G.O. Carlson Airport in Coatesville, Pa.

Yes, the chains have been busy. “I think they are being opportunists in a sense that when they see a chance to do anything, they are on it like a bee on honey,” noted Steve Dennis, chairman of the FBO industry advisory firm Aviation Resource Group International (ARGI). “The economic imperative is that companies in this industry aren’t seeing much growth, and the only way they really improve their earnings is by consolidation.”

There are several reasons why the FBO market is ripe for the picking. In a conversation during this year’s NBAA Schedulers and Dispatchers Conference, Signature Flight Support president Maria Sastre noted the “graying of the industry” as a factor in the consolidation trend. “I think the older generations that have owned a lot of these individual family businesses are looking to move out if they can’t find an easy way to transfer the inheritance to their family members,” she told me. “There’s going to be a natural evolution in the business that I believe will occur over the next five to ten years.”

The venerable stock market adage states “buy low, sell high,” and while the major service provider chains would certainly advocate the former, those individual FBO owners who could afford to hang tight did wait until their business fortunes began to rise again with increases in private aviation traffic. While some might have had their plans stalled by the economic downturn, their window could now be opening again as the business aviation industry slowly climbs from the crater of 2009-2010.

“Now that the economy is recovering a little bit, those people who were looking at perhaps exiting the business a few years ago are now seeing some reasonable numbers, so they have a better shot at exiting their business,” said John Enticknap, president of FBO industry consultancy Aviation Business Strategies Group (ABSG). He believes that the maneuvers seen at major business aviation hubs such as Westchester County Airport, Van Nuys and Teterboro will foster competition among healthy businesses rather than price-war squabbles among weak players struggling to hang on.

Currently there are approximately 3,700 FBOs in the U.S., with about 10 percent of them under the control of service provider chains. One thing is certain: if current trends persist, that percentage will rise as the consolidation pot continues to boil.