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Characteristics of the FBO Industry 2018-2019 (2020)

Chapter: Chapter 7 - Roadmap and Conclusions

« Previous: Chapter 6 - Publicly Owned FBOs
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Suggested Citation:"Chapter 7 - Roadmap and Conclusions." National Academies of Sciences, Engineering, and Medicine. 2020. Characteristics of the FBO Industry 2018-2019. Washington, DC: The National Academies Press. doi: 10.17226/25846.
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Suggested Citation:"Chapter 7 - Roadmap and Conclusions." National Academies of Sciences, Engineering, and Medicine. 2020. Characteristics of the FBO Industry 2018-2019. Washington, DC: The National Academies Press. doi: 10.17226/25846.
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Page 63
Suggested Citation:"Chapter 7 - Roadmap and Conclusions." National Academies of Sciences, Engineering, and Medicine. 2020. Characteristics of the FBO Industry 2018-2019. Washington, DC: The National Academies Press. doi: 10.17226/25846.
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Page 63
Page 64
Suggested Citation:"Chapter 7 - Roadmap and Conclusions." National Academies of Sciences, Engineering, and Medicine. 2020. Characteristics of the FBO Industry 2018-2019. Washington, DC: The National Academies Press. doi: 10.17226/25846.
×
Page 64
Page 65
Suggested Citation:"Chapter 7 - Roadmap and Conclusions." National Academies of Sciences, Engineering, and Medicine. 2020. Characteristics of the FBO Industry 2018-2019. Washington, DC: The National Academies Press. doi: 10.17226/25846.
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Page 65

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61 This compilation of data about FBOs was a first attempt to bring together information about the FBO industry. Private-sector participants know a lot about the markets where they are active or considering entry. Publicly owned FBOs operate largely independent of one another. This publication had ambitious goals, including the following: • Acquiring data about FBOs that is largely self-reported information; • Merging this information with airport data provided in the FAA Form 5010-1, Airport Master Records and in the NPIAS; • Discerning ownership patterns and categories of FBOs; • Documenting the prevalence of SS fueling options in the United States and the use of branded versus unbranded fuels; • Characterizing levels of service offered by different types of FBOs; and • Building a framework to update the data. Verification of data and an objective of understanding the structure and ownership patterns of FBOs required detailed scrubbing of data and an analysis of FBO information that resulted in a larger-than-expected effort on the front end of the project. That said, the study team became wiser about what would be needed to continue this effort on a regular basis. Thus, this chapter is devoted to a roadmap for future efforts. Current Status of FBO Analysis FBOs have been studied by both the industry and airport sponsors, primarily on an individual FBO basis, for a variety of objectives: • To evaluate the potential value, revenue streams and expenses, and return on investment for acquisition or expansion purposes; • From a public perspective, capital and staffing requirements, as well as potential revenues to take over an expiring FBO lease or a failed FBO; • To examine fuel prices to determine price levels that are competitive in the market and that cover FBO operating expenses for the fueling facility; • To survey rates and fees at FBOs; • To survey business expectations for future fuel sales and activity levels; • To rank FBOs for customer satisfaction about levels of service and facilities; and • To report on sales and acquisitions in industry publications. Detailed evaluations of individual FBO properties remain proprietary, as do the finer points of fuel-pricing strategies and annual sales data of private FBOs. Industry reporting is typically high- level, leaving the study team to search primarily through self-reported data points. Since 43% of FBOs are now owned by public entities that operate typically as single locations, publicly owned C H A P T E R 7 Roadmap and Conclusions

62 Characteristics of the FBO Industry 2018–2019 FBOs have a particular interest in greater industry data so that they might effectively position themselves in the market, set appropriate levels of minimum standards (from the airport sponsor perspective), and offer services that reflect best practices in the provision of FBO services. Proposed Approach to Future Research Based on the analytic experience of this project, Figure 28 suggests an approach to future updates and new research on the FBO industry that includes the following: • User input about FBO issues to be examined • Data determination and availability • Analytics desired and reports designed • Data collection • Database design/modifications of a tool for annual update of data • Analysis • Reports • User review and suggestions • Data verification • Database inputs and updates Issues to Resolve There are numerous challenges to analysis of the FBO industry, some of which can be addressed effectively through annual updates and ongoing improvements to the database. These challenges are outlined as part of the roadmap. Fluidity of FBOs The FBO industry is somewhat fluid, with new FBOs opening, closures, acquisitions, assump- tions of leases, and takeovers. Now that there is a list of FBO locations at public-use airports for 2018, annual updates can track changes by airport. Figure 28. Future FBO industry updates.

Roadmap and Conclusions 63 Meaningful Categories of Analysis This FBO study divided the universe of FBOs into four categories: publicly owned, indepen- dent, small-network, and large-network. Other analysts classify FBOs in terms of number of FBO locations, by total revenue, services offered, and retail fuel characteristics. It would be useful for the next iteration of data compilation for industry stakeholders to agree on working defini- tions of FBO types and categories of relevant FBO services for comparative purposes. Verification of Self-Reported Data When it comes to information about FBO services, including fuel and fuel brands, the data are largely self-reported. Online platforms are devoted to providing pilots and flight depart- ments updated information about fuel services and prices. These Internet sites and subscription services are potentially useful ways to verify specific information. In the instances of one FBO per airport, services can be matched to FAA Form 5010-1, Airport Master Records. However, for the airports with multiple FBOs present, service levels per FBO would require additional in-depth research. User Surveys Going forward, it would be possible and useful to provide annual updates of a core group of data and track changes within the industry. It would also be interesting and useful to identify a topic that would require additional analysis and reporting. User surveys would be indispensable for discerning which parts of the core report is useful for updates and what special topics hold interest to the user community. Additional Data Sources As the database is built out, additional information about FBOs and the airports where they are located would expand the analytical capability of the database. The following are data sources that could be incorporated into the database more completely or as new sources of data. FAA Data: NPIAS, FAA Form 5010-1, Airport Master Records, Operations Network, Passenger Boarding/All-Cargo Statistics For this round, a defined set of data and use of NPIAS airport-asset classes were used as proxies for different-size airports, functions, and capabilities. Much more data are pub- licly available in the FAA Form 5010-1, Airport Master Records, and Operations Network (OPSNET), as well as enplanement and cargo data. These data sets could support additional analytics to investigate the relationships between different types of FBOs and runway length, air traffic control, customs capabilities, and distance to central business districts. FBO Listings For this project, AirNav was used as the principal source of FBO data; however, since most of this information is self-reported, for verification purposes, it would be useful to cross-check FBO information currently found in the AC-U-KWIK and FlightAware databases. FBO Fees and Charges A developing area of interest, particularly for small-aircraft operators, is the availability of FBO fees and charges and/or minimum fuel-purchase requirements compiled in one location.

64 Characteristics of the FBO Industry 2018–2019 There are several potential or existing websites, such as Rampfee.me, for collecting and report- ing this information. As of the fourth quarter of 2018, Rampfee.me had collected FBO listed fees from 2,262 FBOs. For averaging purposes, this is a significant sample size. However, the focus of the sample results is heavily weighted toward small piston aircraft versus jets. Another example is AOPA’s website, which is also adding to its Airport Directory information about FBO fees charged for different types of aircraft. This data are self-reported by the FBOs. There are other existing websites that compile data for different purposes and users. These web-based reporting sites are available for free or by subscription. Business Aviation Argus Information International, Inc., publishes data on various metrics associated with flight activity for Part 91 private jets, Part 135 charter aircraft, and fractional operators. Business aviation is one of the strongest growth areas of private flying. A core business of Argus is keeping track of business aviation. Their data could be integrated in useful ways into a fuller analysis of FBOs that serve business aviation. Retail Fuel Retail fuel prices are widely available in the public domain. For 100LL customers, retail prices tend to represent actual prices paid for fuel. For jet fuel prices, this is not the case, as most large-volume jet fuel customers purchase jet fuel at a discount either based on volumes, con- tract rates, or participation in fuel discount programs. That said, retail jet-fuel prices are decent proxies of directional changes in fuel costs. Future for Special Reports This synthesis concentrated on gathering and organizing data about FBOs to describe the basic size of the industry, ownership patterns, FBO presence at different-size airports, types of fuel and other FBO services offered, and fuel-brand market shares. More can be done with the information developed. For example, the database holds the potential to do the following: • Track FBO turnover rates. • Focus on certain geographic regions to profile FBO industry growth/decline, market satura- tion, and GA activity. • Investigate the characteristics of virtual networks and affiliations of FBOs and how they are competitively positioning their brands and services. • Estimate aviation fuel sales based on state aviation-tax data where available. • Examine correlations between FBO categories and airport activity and other metrics. • Survey/profile publicly owned airports to benchmark fuel sales and other revenue sources. • Evaluate the impacts of low-price leaders on fuel prices in designated regions. • Analyze the role of fractional ownership in business aviation, charters, and demand for services at FBOs. • Describe and analyze noncommercial landing fees as well as new data collected on FBO rates and fees. With the foundation set and a good systematic approach, this report on the FBO industry has the potential to be refined, updated, and expanded as a platform to discuss trends and innovations in the industry.

Roadmap and Conclusions 65 Conclusions The analysis of the FBO industry clearly demonstrates how as a service provider FBOs have adapted and responded to the changing requirements of the different segments of GA, which include aircraft owners and pilots that fly for personal reasons, for business travel, for special- ized missions such as emergency airlift, for charters, or for flight training. This profile of the FBO industry should be considered a work in progress and presents an opportunity for industry participants to identify issues that require a deeper dive and to agree on benchmarks that effectively help to document changes in the FBO industry and demand for products, services, and facilities over time. Several probable events are already occurring to transform the FBO landscape. They include the following: • Transitions to alternative fuels and different potential requirements for fuel storage as well as distribution channels (pipelines, trucks, rail, and ships); • Testing of high valuations of leaseholds and highly leveraged FBO facilities when the economy weakens; • Additional acquisitions, lease assumptions, and new expansions for virtual and owned- network FBOs; • Experiments with sharing of specialty services among all types of FBOs; • Ongoing changes in ownership patterns for publicly owned and independent FBOs; • Further retirement of piston aircraft and aging pilots; • Compliance with ADS-B requirements in controlled airspace; and • Solutions to shortages of mechanics and pilots. As an industry composed of public and private participants, a comprehensive profile is in the early stage. The FBO industry can benefit from further examination of component parts, agree- ment on units of analysis, and improved quality and consistency of the data.

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The fixed-base operator (FBO) industry provides aeronautical services to a wide spectrum of aircraft operators at airports. The term FBO is defined by the FAA as “a business granted the right by the airport sponsor to operate on an airport and provide aeronautical services . . .” The most basic FBO offers its customers self-service fueling, as well as a set of core services such as use of hangars, ground services, and, sometimes, aircraft maintenance.

The TRB Airport Cooperative Research Program's ACRP Synthesis 108: Characteristics of the FBO Industry 2018-2019 profiles the FBO industry as of December 2018. This analysis of data provides a quantitative snapshot of the FBO industry intended to serve as a reliable baseline of information for tracking FBO trends in the future.

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