This story is part of AIN's continuing coverage of the impact of the coronavirus on aviation.
According to the Aviation Business Strategies Group's (ABSG) annual FBO Fuel Sales Survey & 2021 Industry Forecast, nearly 70 percent of the North American FBOs it surveyed reported decreased fuel sales last year as a result of the Covid-19 pandemic and its dampening effect on travel.
The report, which was released this morning, is typically distributed at the start of NBAA’s Schedulers & Dispatchers Conference, which itself is being held virtually this year due to Covid concerns, combined with the also-supplanted International Operators Conference on the NBAA Go platform.
According to ABSG principals John Enticknap and Ron Jackson, the results of the survey showed that while an additional 13 percent of the FBOs queried indicated they had the same level of fuel sales between 2019 and 2020, approximately 20 percent did report an increase in volume, including 12 percent that reported a more than 5 percent rise in fuel sales year-over-year despite the overall reduced business aircraft activity.
“There’s no question that 2020 will go down as one of the most economically depressed periods ever in fuel sales for the majority of the FBO industry,” said Enticknap. “This is by far the most negative results we have experienced in the eight years we have been conducting this survey.”
While corporate travel cratered as businesses found alternate means to conduct meetings, Jackson observed a “fairly robust” charter market that contributed the lone bright spots for the FBO industry, at least in certain locations.
“With the Covid-19 human distancing awareness recommendation, chartering aircraft and the personalized FBO environment became a popular choice as an alternative to airlines and crowded commercial terminals,” Jackson said. “FBOs located primarily in the south, as well as recreational and second-home destinations, reported steady transient traffic that helped buoy otherwise soft Jet-A fuel sales.”
Survey respondents were also gauged on their confidence in the economy. Last year 73 percent were positive about the direction the economy was moving, but after being worn down by a year of Covid restrictions, reduced traffic, and approximately half a million fatalities in the U.S. alone, that level has plummeted to just 18 percent, with 42 percent this year believing the economy is heading in the wrong direction.
Indeed, when asked to list their greatest concerns and challenges, the most frequently-cited response centered on the effects of the pandemic on the economy, transient aircraft traffic, and keeping a service team intact.
Based on interviews with FBO owners and aircraft operators, ABSG forecasts a slow recovery for the industry in 2021. Among FBO operators, more than half expect their fuel volumes to either decline or remain the same versus 2020. Oil prices are predicted to increase through the first half of the year, approaching $70 barrel—the first time it will have reached that level since September 2018—as petroleum markets tighten and consumer demand begins to outstrip production. That could result in irregular price fluctuations for jet-A as FBOs monitor their supplies and adjust price margins accordingly.
In the post-Covid environment, ABSG suggests that aircraft operators have become more selective in choosing FBOs—favoring those that have achieved registration under the International Standard for Business Aviation Handling (IS-BAH) or at the very least have adopted safety management systems—due to perceived health and safety precautions.
Sustainable aviation fuel (SAF) remains a rare offering, with just 1 percent of the survey respondents planning to offer it in 2021, along with another 13 percent who remain undecided. Some FBOs in the survey even listed the effect of green energy rhetoric, which they fear could slow economic recovery and stymie flight department activity, as one of their top-five concerns. Yet, ABSG warns service providers that the renewable fuel is here to stay and that they should expect to eventually add it to their inventory as demand from aircraft operators increases along with supply.