NBAA Convention News

Corporate Aircraft Association Sees Business Take Off

 - October 17, 2019, 4:00 PM
FBOs such as High Performance Aircraft at San Diego's Gillespie Field vie for the right to list "CAA preferred" among their qualifications. In return for the increase in traffic that endorsement may attract, such service providers offer discounted fuel and other benefits to Corporate Aircraft Association members.

With NBAA’s annual convention serving as the nexus of the U.S. business aviation industry, it provides an excellent opportunity for the Corporate Aircraft Association (CAA) to meet with its members and FBO partners. The organization, founded in the mid-1990s to find favorable hotel rates for corporate aircraft flight crews, has come a long way since then. With FBOs encroaching on its discount hotel-rate model, the organization’s founders instead began negotiating directly with them to offer fuel discounts for its members and, in 1997, the fuel program was launched.

Today, CAA lists nearly 9,000 individual Part 91 aircraft up to BBJs on its member rolls and has grown from approximately 25 participating FBOs in the early 2000s to 10 times that number. The plan is simple. FBOs wishing to join the program present their bid of what they will pledge to offer the group’s members, who will then vote whether to accept that location as the CAA-preferred vendor at that airport for a three-year term. Such an offer involves discounted fuel pricing to the CAA members. “If they bid a dollar into-plane fee, the fuel price can go from raw fuel plus taxes [of] $2.50 a gallon to $6.50, but the into-plane fee will always be a dollar on top of that for three years,” said Robert Bordes, the association’s president. That results in reduced costs of up to $2 per gallon in many cases. Some FBOs add further incentives to sweeten their offers, such as free overnight parking for members or complimentary lavatory service.

Those bids are important, as FBOs, which have been part of the program for more than a decade in some instances, found themselves voted out when a competitor proffered a better offer to CAA’s membership. In one such case, Bordes estimated that switch was worth 700,000 gallons of additional fuel sales a year. “It’s always sad when you see an FBO flip like that,” he told AIN, but whoever wins the vote gets the contract.”

While competition for the right to list “CAA-preferred” and enjoy its associated extra traffic is heated among FBOs at many airports, over the past few years, single-source providers have also begun to join. “Three or four years ago, we couldn’t sell CAA to an airport that just had a single-source FBO, but we’re educating the GM at that airport that he might not think he has a competitor because he’s the only one on the field, but he’s competing with where that airplane just flew in from, and the next stop that airplane is going to make when it leaves them.”

In major metropolitan areas, CAA offers its members alternatives, where they might choose to trade fuel savings for a slightly longer limousine ride from a more remote airport.

The association does not charge the FBOs anything to participate in the program. “The beauty part of CAA is we’re not a middleman,” Bordes said. “We don’t have our hand stuck out to take something out of the deal, the customer is our member and the member pays the FBO directly.” Instead, the organization derives its funds from membership enrollment, which is $500 per tail number annually, (80 percent of the company’s members are single-aircraft operators) a cost that Bordes says a member can recoup on just one fueling for a midsize or larger aircraft. “It might take a turboprop two or three fuelings before you save $500, but then it's money in the bank.”

To demonstrate that, CAA (Booth N2329) offers a unique six-month test period to allow prospective members all the benefits of the program for free. After that, the conversion rate to full membership is above 70 percent. “A lot of times you get a big, long-range jet like a Gulfstream come in from Africa or Europe,” explained Bordes, “they’ll buy a membership just to make one trip over because when they put 2,000-3,000 gallons on to go home, and they are saving $1 a gallon, membership is only $500 so they just put $1,500 back in their pocket.”

With a mantra of enhancing the operating efficiencies of Part 91 flight operations, the organization is constantly combing its membership rolls to ensure that no Part 135 aircraft creep in. By comparing its membership’s tail numbers against the FAA database on a quarterly basis, more than 150 aircraft a year are disqualified from the organization for engaging in charter activities.

For the past several years, the organization has been adding new aircraft at a clip of nearly 1,000 a year, expansion driven by the growing shift to electronic format. Prior to that, everything from member-only fuel-price updates from its dozens of FBOs, to its applications, to voting on FBO bids, was done manually. Even its membership cards have now become passé. “We used to mail out cards, and you’re talking 9,000 cards a year, and most companies lose a card, so they would want two, so you’re looking at 18,000 cards you have to mail out,” noted Bordes. “We’ve even gotten away from using the electronic card because the FBOs have the ability to just type in a tail number and verify them.”

An online application features a map showing all of the FBO partners, and members can click on them to see fuel pricing, volume breaks, and contact information      

The organization also verifies that its preferred FBOs live up to their contracts, by auditing them at least once a year. Any deviation from the contracted price structure will trigger an investigation by CAA. “We want to get it right for our members, and if [the FBOs] flunk an audit, we fix it and then we reaudit again in a certain time period to make sure that the fixes still apply, and they’re not just gaming the system,” said Bordes.