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78 CONCLUDING THOUGHTS AND CONSIDERATIONS The purpose of the synthesis was to investigate different business models for the delivery of fixed base operator (FBO) ser- vices. Although changes in the industry are apparent, research in the public domain is somewhat unconsolidated, although various industry participants maintain private data about fuel sales, pricing, acquisition prospects, and trends in FBO ser- vices, facilities, and loyalty programs. The research team used a multitrack approach to gather information about FBO ownership, industry trends, and factors that lead to the successful and enduring provision of FBO services. The research included the following: ⢠A literature search of reports, presentations, and industry publications ⢠Acquisition and analysis of AC-U-KWIK data about FBOs operating in the United States ⢠Engagement on the project with a panel whose members represented airports, industry organizations, and FBOs ⢠In-depth case studies of 10 airports and three FBOs that reflected diverse approaches to the provision of FBO services and highlighted the individual nature of FBO solutions ⢠Reliance on the research teamâs expertise and knowledge about procurement processes, FBO negotiations, and lease terms Airport sponsors in the United States approach the provision of FBO services in three basic ways, but within each approach lies numerous variations: ⢠Traditional lease with a private FBO ⢠Contract management of FBO facilities and services ⢠Airport self-operation of FBO facilities and services In the 1980s, when general aviation (GA) was robust and growing, over 10,000 FBOs operated in the United States and most of them were private enterprises. Today, less than 3,500 FBOs exist and almost half (47%) are operated directly by air- ports. For those airports facing expiration of an FBO lease or local preferences to reprivatize FBO operations, this synthesis offers tools to evaluate local conditions and decide which business model (or variation) is best suited for the airport. Each airport is likely to arrive at a custom solution. The case studies illuminate how airports and the FBO industry have addressed diminished general and business aviation activity through the consolidation of providers and intense competition for new and innovative ways to provide services to its customer base. The rise of network FBOs, loyalty programs, contract discounts, and elite travel services are among the innovative ways airports attract and keep customers. Many small GA airports also have experienced diminished traffic and fuel sales. To stay in the game, some small airports have taken advantage of self-service fueling systems and credit card reader technology to offer fuel services at a lower cost. In these markets, the number of FBOs operated directly by airports has increased. In 2016, 1,630 airport-operated FBOs repre- sented 47% of all FBO locations (3,440). Independent operators and small network providers (three to five locations) remain active. However, the slightly larger GA airports and small hub and nonhub airports have become a focal point of activity where airports are taking over FBO services and where evaluations of alternative FBO business models are particularly relevant and where the debate exists about public or private operation of an FBO. The landscape of public and private providers appears permanent and in many ways represents the best of joint participa- tion in efforts to continue the vibrancy of the national system of airports. The case studies point to private FBO providers CHAPTER SIX CONCLUSIONS
79 that assist distressed airports with basic airport maintenance and repair. Other airports have taken over when a private FBO has left, strengthened the FBO business, and delivered it back to the private sector. Larger airport authorities have worked diligently to qualify and expedite the acquisition of an FBO. The lessons learned indicate that both airports and private FBOs will continue to support the GA sector. Much consolida- tion has occurred at the largest airports. With 130 locations of wholly owned or network partners, Signature Flight Support is by far the largest provider. Time will tell if other networks also will combine or if networks of independent FBOs will continue to grow and gain market share. At the smaller end of the airport spectrum, airport sponsors that are evaluating options for an expiring third-party FBO lease may opt for an airport-operated FBO or one managed by a contract operator. This synthesis offers airport experiences and tools to evaluate business models, begin a procurement process, and prepare a long-term lease for an FBO or contract provider. The research team offered insight into data development and industry practices, but continued research would benefit both airports and FBOs. Suggested Further Research Development of an FBO Database and Benchmarking The landscape of FBOs remains fluid because of FBO closures, mergers, and acquisitions. Three databases publish informa- tion about airports, FBO services, and fuel. Pilots, schedulers, and dispatchers are the primary users. These databases also contain valuable information about the state of the FBO industry and its participants, but at present they are not organized for retrieval and analysis from this perspective. The research team acquired data from one vendor that revealed the surpris- ing extent of airport-owned and -operated FBOs. Because the nature of syntheses involves relatively quick research, further database development and analysis of this industry is warranted and would be highly beneficial to the airport community. Special Analysis of Independent FBOs Small, independent FBOs remain among the most numerous FBO providers. Many rely on fuel sales as the principal source of revenue. These FBOs are vulnerable to declines in GA activity, attrition because of owner retirement, and decisions made by price-sensitive single-engine aircraft owners. From the airport perspective, independent FBOs are also most likely to transi- tion to airport ownership. Further research through case studies and surveys of this group may help to uncover the successful business practices of this segment of the FBO industry, to anticipate the inflection points when airports find themselves with a failed or closed FBO. Guidebook to Analyze Local Factors and FBO Economics This synthesis articulated many of the steps that airport sponsors would take to evaluate local considerations and airport FBO economics. A more in-depth guidebook would help airports to analyze the pros and cons of different FBO business models and provide staff with communication tools to brief stakeholders and airport governing bodies. The goals for financial self- sufficiency are driving some airports into commercial activity that may or may not be feasible. A guidebook that digs deeper into the analysis of local considerations and the direct and indirect costs of operating an FBO could contribute to future dis- cussions about airport-operated FBOs.
