Characteristics of the FBO Industry 2018-2019 (2020)

Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

39 Fixed-base operators provide a diverse set of aviation products, services, and facilities. Fig- ure 20 identifies the common ways that FBOs serve their GA customers and provide services and facilities to commercial and all-cargo airlines; emergency medical; and military aircraft, passengers, and crew. This chapter examines what types of products, services, and facilities that FBOs reported in the AirNav database to attract visiting aircraft to their location. Most FBOs offer fuel, ground services, basic maintenance, a GA terminal, and hangar rentals or leasing. Flight and technical services offered at FBOs often stem from the evolution of the FBO; that is, if an FBO began as a flight training facility, it is heavy on flight instruction, aircraft rentals or charters, and sight- seeing. FBOs can also concentrate on concierge services; avionics; or aircraft sales, leasing, and management. Fuel Services Aircraft fuel remains a cornerstone of FBO services. In the AirNav database, 36 FBO loca- tions reported no fuel services. This may be because tenants self-fuel, there are no based air- craft, or the airport sponsor has opted to exclusively sell fuel at an airport where there are multiple FBOs. Average Fuel Prices Average fuel prices for Jet A, 100LL, and motor gasoline (Mogas) fluctuate weekly, sometimes daily. Figure 21 shows the wholesale/resale price of Jet A, 100LL, and Mogas for the last 20 years (with no adjustments for inflation). Mogas prices track closely with Jet A prices. Some GA air- craft owners have engines that can operate with Mogas instead of 100LL, which sells at a higher price per gallon; however, only a handful of FBOs sell Mogas because this fuel competes directly with automotive fuel sold at gas stations, which is often sold at a lower price. Table 16 lists average fuel prices effective May 1, 2019, and is published primarily to set a base- line for fuel prices. As noted in Chapter 2, 100LL and Mogas retail prices tend to reflect actual retail prices paid. Jet A prices are less transparent, as jet fuel customers frequently have volume discounts or contract rates available to them at the time of a fuel purchase. FBO Fuel Products FBOs offer different combinations of fuel products. Of the 3,661 FBO locations, 1,077 sell FS and SS Jet A fuel and no 100LL. A total of 811 FBO locations offer SS 100LL exclusively, C H A P T E R 4 Profile of FBO Products, Services, and Facilities

40 Characteristics of the FBO Industry 2018–2019 Source: Compiled from data available at the U.S. Energy Information Administration, https://www.eia.gov/dnav/ pet/pet_pri_refoth_a_EPJK_PWG_dpgal_a.htm. $- $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 Do lla rs p er G al lo n U.S. Aviation Gasoline U.S. Kerosene-Type Jet Fuel U.S. Motor Gasoline Figure 21. Jet, 100LL, and motor gasoline wholesale/resale price by refiners (nominal dollars per gallon). Aircraft •Guidance and parking •Ground services and handling – Towing – Ground power – Deicing – Lavatory – Potable water •Fuel •Lubricants •Aircraft cleaning – Cabin – Exterior •Technical services – Airframe and power plant – Avionics and instruments – Paint and interior Passengers, Crew, and Aircraft Owners •Loading and unloading •Baggage handling •Catering •Concierge services •Pilot supplies •Flight services – Flight training – Aircraft rental – Aircraft charters – Aerial photography – Aircraft management – Aircraft sales •Ground transportation Facilities •GA terminal building •Aircraft parking (ramp) •Aircraft hangars •Office •Shop •Storage •Vehicle parking Source: Adapted from Aviation Management Consulting Group, Inc. et al. 2012. Figure 20. Aviation products, services, and facilities.

Profile of FBO Products, Services, and Facilities 41 and these locations are owned by both publicly owned and privately owned FBOs (492 public/ 319 private). Table 17 shows the different fuel service offerings, starting with the most frequent combinations of fuel services. Table 18 shows FBO fuel services by NPIAS airport category. At primary airports, most FBO fuel services are located at small and nonhub airports. Few of these FBOs sell 100LL. At national nonprimary airports, Jet A fuel is also the predominant fuel service. However, at the smaller nonprimary airports, both Jet A and 100LL are sold, and 70% of FBO locations at NPIAS airports offer SS 100LL. FS 100LL is far less prevalent. Brand Market Share Fuel suppliers serve both national and international markets. Some fuel distributors may focus on certain regions of the country. Avfuel, for example, began in the Upper Midwest and Fuel Types Reporting 100LL/Avgas Jet A Mogas FAA Region FBOs FBOs Avg. ($) Min. ($) Max. ($) FBOs Avg. ($) Min. ($) Max. ($) FBOs Avg. ($) Min. ($) Max. ($) Nationwide 3,674 3,583 5.09 3.32 10.00 2561 4.73 2.86 10.00 89 3.86 2.49 10.00 Alaska 79 69 6.73 5.16 10.00 63 6.12 3.77 10.00 5 7.95 5.90 10.00 Central 355 352 4.74 3.58 7.59 211 4.31 3.00 7.81 18 3.58 2.99 4.20 Eastern 362 349 5.49 3.90 9.14 255 5.23 3.21 8.97 6 3.99 3.49 4.75 Great Lakes 735 725 4.97 3.60 8.59 482 4.53 2.87 8.43 26 3.58 2.99 4.30 New England 145 140 5.52 4.00 8.62 86 5.09 3.50 8.55 7 4.21 3.85 4.95 Northwest Mountain 391 381 5.22 3.85 7.15 263 4.72 3.25 7.92 12 4.14 3.50 5.15 Southern 676 664 4.99 3.57 8.49 528 4.69 2.99 8.46 9 3.53 2.49 4.00 Southwest 577 569 4.78 3.32 7.71 414 4.47 2.86 7.29 5 3.87 3.50 4.25 Western Pacific 354 334 5.39 3.99 8.52 259 5.05 3.28 8.52 1 not available Source: AirNav, May 1, 2019. Note: Report includes prices reported between April 8, 2019, and May 1, 2019. This is a dynamic data table that changes daily. Table 16. Listed fuel price report as of May 1, 2019. Fuel Services Jet A 100LL FS SS FS SS FS and SS Jet A Only X X 1,077 29.4 SS 100LL Only X 811 22.2 FS Jet, SS Jet A, SS 100LL X X X 449 12.3 FS and SS 100LL X X 365 10.0 All Fuel Services X X X X 342 9.3 SS 100LL and SS Jet A X X 152 4.2 SS Jet A Only X 128 3.5 FS Jet A and SS 100LL X X 119 3.3 FS Jet, FS 100LL, SS 100LL X X X 85 2.3 FS Jet A Only X 65 1.8 No Advertised Fuel Services 36 1.0 FS 100LL Only X 11 0.3 Other Configurations 21 0.6 All FBO Locations 3,661 100.0 Source: Compiled from AirNav Database, December 2018. Number of Locations Percentage of Share Table 17. Fuel services at public-use airports.

42 Characteristics of the FBO Industry 2018–2019 has since expanded both its fuel distribution and network of FBOs internationally. Figure 22 shows market share by brand. Phillips 66, Avfuel, and Shell have the largest branded presence at FBO locations. However, almost one-third of FBOs have opted to not sell branded fuel listing their fuel products as either undesignated or independent. Signature Flight Support lists its fuel brand as independent, but likely purchases fuel from multiple fuel suppliers. Table 19 numerically shows brand market share. Of branded fuels, Phillips 66, Avfuel, Shell, and EPIC have the largest market presence. Avfuel, EPIC, and World Fuel have more locations with private FBOs. Table 20 shows brand shares for airports that offer SS 100LL fuel exclusively. The largest group of FBOs in this category tends to purchase fuel on the spot market, with 54% either undesignated or independent with respect to brand. This is not surprising, as volumes of 100LL fuel sold tend to be small and fuel deliveries less frequent. That said, Phillips 66 and Avfuel actively supply this group, as does Shell and EPIC to a lesser extent. Other FBO Products, Services, and Facilities Beyond fuel, FBOs offer additional products, services, and facilities directed at supporting based and visiting aircraft as well as passengers, cargo, and crew. Among the most expected aircraft services include the following: • Available SS or FS fuel (100LL and Jet A) and lubricants (for piston and turbine engines); • Basic line services that include guiding and towing aircraft that are arriving or departing as well as operating airfield equipment such as fuel trucks, aircraft-towing vehicles, and luggage carts; Airport Category Full Service Self Service FBO Locations Public-Use Airports with FBOs Jet A 100LL Jet A 100LL Primary Airports Large Hubs 45 0 38 1 46 30 Medium Hubs 65 1 59 1 65 31 Small Hubs 116 0 108 24 123 72 Nonhub 280 21 270 96 311 247 Total Primary Airports 506 22 475 122 545 380 % of Primary Airports 93% 4% 87% 22% 100% Nonprimary Airports National 178 2 172 48 191 88 Regional 518 96 517 323 590 492 Local 702 467 636 963 1,234 1,278 Basic 153 164 180 446 544 840 Unclassified 19 19 37 83 106 243 Total Nonprimary Airports 1,570 748 1,542 1,863 2,665 2,941 % of Nonprimary Airports 59% 28% 58% 70% 100% Non-NPIAS Public-Use Airports 67 54 147 350 451 450 Totals All Categories 2,143 824 2,164 2,335 3,661 3,771 Percent of FBO Locations 59% 23% 59% 64% 100% Source: Compiled from FAA, National Plan of Integrated Airport Systems (2019–2023) and AirNav Database, December 2018. Table 18. Fuel services by airport category.

Source: Compiled from AirNav Database, December 2018. World Fuel, 135, 4% Avfuel, 677, 18% Chevron, 3, 0% EPIC, 250, 7% ExxonMobil, 1, 0% Independent, 936, 26% Phillips 66, 844, 23% Shell, 534, 15% Tesoro, 3, 0% Texaco, 19, 0% Undesignated or No Fuel, 259, 7% Figure 22. Fuel brand market share. Use of Brand By: Fuel Brand Number of Locations Percentage of Brand Share Public/School FBOs Private FBOs Phillips 66 844 23 415 429 Avfuel 677 18 222 455 Shell 534 15 248 286 EPIC 250 7 100 150 World Fuel 135 4 41 94 Texaco 19 1 5 14 Chevron 3 0 2 1 Tesoro 3 0 0 3 ExxonMobil 1 0 0 1 Independent 936 26 378 558 Undesignated or No Fuel 259 7 151 109 Total 3,661 100 1,562 2,099 Source: Compiled from AirNav Database, December 2018. Table 19. Fuel brand share by FBO location. Fuel Brand Number of Locations Public FBOs Private FBOs Phillips 66 155 19 92 63 Avfuel 95 12 59 36 Shell 59 7 41 18 EPIC 43 5 20 23 World Fuel 20 2 12 8 Texaco 7 1 3 4 Chevron 2 0.2 2 0 ExxonMobil 1 0.1 0 1 Independent 313 39 179 134 Undesignated Brand 116 14 84 32 Total 811 100 492 319 Percent Public/Private 61% 39% Source: Compiled from AirNav Database, December 2018. Percentage of Brand Share Table 20. Brand share for SS 100LL fuel facilities.

44 Characteristics of the FBO Industry 2018–2019 • Aircraft cleaning of the cabin, lavatory, and exterior, as well as resupply of potable water; • Technical services to maintain the airframe and power plant, avionics, and instruments; • Parking for aircraft on the ramp or in hangars/vehicle parking; and • Aircraft management. Less commonly, an FBO will be called upon to manage fuel storage on behalf of commercial airlines or high-volume private users; load or unload air cargo on or off an aircraft; move air cargo to or from an on-airport warehouse; or paint or otherwise modify the exterior or interior of an aircraft. FBO services for passengers, crew, or aircraft owners commonly include the following: • Assistance with loading and unloading baggage or cargo; • A GA terminal building with lounge, office space, Wi-Fi, pilot supplies, restrooms, showers, and food and beverages; • Concierge services involving hotel and restaurant reservations and catering; • Ground transportation to and from the airport via courtesy cars, rental cars, taxis, transporta- tion network companies (e.g., Uber or Lyft), or public transportation; and • Flight services such as flight instruction, aircraft rental and charters, and aerial photography and sightseeing. At some smaller airports the FBO provides basic services, products, and facilities and may also manage the airport for the airport sponsor. Websites such as AirNav, AC-U-KWIK, FlightAware, and AOPA each list aviation fuel services, current prices, and fuel brands available at airports. In addition, FBOs will list products, services, and facilities that may attract pilots, flight departments, and dispatchers. This study performed a word search on the AirNav database to determine the most advertised FBO products, services, and facilities. The results are presented in Table 21. Of note, virtually 100% of FBO locations offer some fuel services, 42% offer hangar rentals, and 40% have some sort of courtesy transportation or crew cars. These three services make up the most common FBO services and facilities. Also, 20% of FBOs also perform airport management duties. FBO Products, Services, and Facilities Service Offered at FBO Locations Percentage of Locations Fuel Services 3,625 99 Hangar Rental and Leasing 1,549 42 Courtesy Transportation or Crew Cars 1,473 40 General Aviation Terminal 1,069 29 Maintenance, Repairs, and Parts (including third-party) 1,058 29 Ground/Line Services, Cleaning, and Detailing 962 26 Airport Management 734 20 Aircraft Rental and Charters 687 19 Flight Training, Pilot School, and Ground Training 684 19 Aerial Tours and Photography 350 10 Aircraft Sales or Leasing 286 8 Avionics Sales and Service 260 7 Aircraft Painting, Interiors, and Modifications 243 7 Aircraft Management 169 5 All FBO Locations 3,661 100 Source: Compiled from AirNav Database, December 2018. Table 21. Key products, services, and facilities at FBO locations.

Profile of FBO Products, Services, and Facilities 45 Noncommercial Landing Fees and Other Fees On the commercial air service side, airlines in 2018 posted their 10th consecutive year of profits since the recession of 2008. Several factors have contributed to this profitability, including a sustained economic recovery and careful management of capacity and yields by the airlines. In addition, the unbundling of airfares with fees for baggage, seats, and meals has also been a significant contributor to the bottom line. For GA airports, the imposition of landing, ramp, and other handling fees are subjects of debate. Most airports advertise current fuel prices, and some airports and FBOs are voluntarily posting fee schedules on their websites. FBO fees and fuel information are also available to any customer that asks for it. FAA Form 5010-1, Airport Master Records, keeps track of airports that charge non- commercial landing fees. As of December 2018, 311 primary and nonprimary airports charge landing fees for noncommercial aircraft. These airports include the following: • 263 publicly owned airports, • 45 privately owned airports, and • three airports owned by the U.S. Air Force. Table 22 shows the types of primary and nonprimary NPIAS airports that have non- commercial landing fees. This group of public-use airports represents about 9% of NPIAS airports. More than half of large-hub airports use landing fees for both commercial and non- commercial aircraft. Several nonprimary airports, especially destination airports, as well as airport sponsors that manage multiple airports, also charge noncommercial landing fees, but as of 2018, these landing fees remain relatively rare. Airport Category NPIAS Airports with Noncommercial Landing Fees NPIAS Airports Percentage of Share Large-Hub 19 30 63 Medium-Hub 9 31 29 Small-Hub 22 72 31 Nonhub 76 247 31 Total Primary Airports 126 380 33 National 25 88 28 Regional 42 492 8 Local 40 1,278 3 Basic 21 840 3 Unclassified 57 243 23 Total Nonprimary Airports 185 2,941 6 Total NPIAS Airports 311 3,321 9 Source: FAA, National Plan of Integrated Airport Systems (2019–2023) and AirNav Database, December 2018. Table 22. NPIAS airports with noncommercial landing fees.