Characteristics of the FBO Industry 2018-2019 (2020) / Chapter Skim
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Pages 9-29
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From page 9... ...
9 The FBO industry provides aeronautical services to a wide spectrum of aircraft operators that includes business and personal flying, charters, air medical, aerial applicators, firefighting, search and rescue, commercial, military, and air cargo airlines. Services needed by these users are diverse and summarized in Figure 4.
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From page 10... ...
10 Characteristics of the FBO Industry 2018–2019 The Economy and General Aviation Several factors outside of economic conditions have contributed to a smaller general aviation industry that peaked in the 1970s. Recreational flying has declined as older, single-engine piston aircraft have left the active fleet and many private pilots retired.
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From page 11... ...
Key Factors Shaping the FBO Industry 11 •Strong economy/strong aviation industry •GA aircraft shipments and operations have staged a modest recovery •Stable and low fuel prices a plus Economic Conditions •Capacity of ultra low-cost carriers (ULCCs) , which are the fastest growing segment of commercial service •ULCCs tend to use local FBO for ground and passenger services •Charters and 9 seat aircraft are replacing air service in small markets and often use FBO services Commercial Aviation Structural Changes •Growth in corporate flying and charter activity •Small piston-aircraft fleet reductions suggest limited growth opportunities in this segment, although student pilots increased for the first time in decades •Demand for and production of Avgas declining •U.S.
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From page 12... ...
Source: Compiled from IHS Markit and the Bureau of Transportation Statistics.
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Key Factors Shaping the FBO Industry 13 Figure 9 shows fluctuations in the wholesale price of fuel (not adjusted for inflation) and the long-term trend lines.
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14 Characteristics of the FBO Industry 2018–2019 at prices available in Week 7, the operator would pay an additional $1,335 over prices available in Week 2. Likewise, had the FBO made the purchase in Week 1, it would have cost $300 less.
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From page 15... ...
Key Factors Shaping the FBO Industry 15 The smallest cities were among the hardest hit, as Table 3 indicates. With fewer departures from smaller airports, the door may be open for FBOs at these airports to provide fuel and ground services to remaining carriers.
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16 Characteristics of the FBO Industry 2018–2019 aircraft have been leaders in these markets. Both airlines have limited on-airport footprints in the cities they serve and use local FBOs for fuel and, sometimes, ground and passenger services.
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Key Factors Shaping the FBO Industry 17 as a principal source of revenue are likely to experience declining sales unless they increase market share, offer new revenue services, or attract additional customer segments. Figure 13 and Figure 14 show the FAA forecasts of hours flown and fuel consumed.
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From page 18... ...
Active Aircraft Hours Flown (000s) Gallons of Fuel Consumed (000s)
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Key Factors Shaping the FBO Industry 19 through a subscription card or a per-hour fee. These revenues help to offset the cost of ownership.
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From page 20... ...
20 Characteristics of the FBO Industry 2018–2019 Airports included in metropolitan areas: Phoenix Area CHD - Chandler Municipal DVT - Phoenix Deer Valley FFZ - Falcon Field GEU - Glendale Municipal GYR - Phoenix Goodyear IWA - Phoenix-Mesa Gateway PHX - Phoenix Sky Harbor Int'l PRC - Ernest A Love Field SDL - Scottsdale South Florida Area BCT - Boca Raton FLL - Fort Lauderdale/Hollywood FXE - Fort Lauderdale Executive HWO - Hollywood/North Perry MIA - Miami International OPF - Miami/Opa-Locka PBI - Palm Beach International PMP - Pompano Beach Airpark TMB - Miami/Kendall-Tamiami Executive Los Angeles Area BUR - Burbank-Glendale-Pasadena FUL - Fullerton Municipal HHR - Hawthorne Mun/Northrop LAX - Los Angeles International LGB - Long Beach/Daughtery Field SMO - Santa Monica Municipal SNA - Santa Ana/John Wayne TOA - Torrance/Zamperini Field VNY - Van Nuys New York Area CDW - Caldwell/Essex County EWR - Newark Liberty Int'l FRG - Farmingdale/Republic HPN - White Plains/Westchester JFK - John F
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Key Factors Shaping the FBO Industry 21 regions experienced declines, primarily in itinerant operations. These two areas also have the lowest population growth.
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From page 22... ...
22 Characteristics of the FBO Industry 2018–2019 FBO services. Some airport sponsors at the end of a lease agreement with a private FBO have elected to exercise a "proprietary exclusive right" to be the sole provider of FBO services or specific individual services such as fueling or deicing.
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From page 23... ...
Key Factors Shaping the FBO Industry 23 regional, and national level. Piston aircraft operators with access to this information can make route planning decisions based on fuel prices.
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From page 24... ...
24 Characteristics of the FBO Industry 2018–2019 • The combination of contract rates and tankering practices has put some FBOs that are out of network at a disadvantage in competing effectively for transient-aircraft fuel sales. • Refiners produce more jet fuel than 100LL.
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From page 25... ...
Key Factors Shaping the FBO Industry 25 Fixed-base operators have added electronic capabilities to address these expectations and to participate more effectively in local, regional, and national markets. Digital capabilities have enabled FBOs to do the following: • Manage fuel inventories.
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From page 26... ...
26 Characteristics of the FBO Industry 2018–2019 Large-Network FBOs Dominate Business Aviation and Smaller FBOs Support Flight Training Centers at the Busiest GA Airports Network FBOs participate in large markets where there is extensive business aviation activity. Small private FBOs and publicly owned FBOs serve a wide range of GA situations, from the smallest GA airports to airports where extensive flight training is offered.
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From page 27... ...
Rank Facility ID Airport Name and State FAA Airport Asset Category Total GA Operations Local Operations Percent Local (%) Domestic Operations by Top 12 Business Jet Aircraft FBOs on Airport 1 DVT Phoenix Deer Valley, AZ GA - National 415,684 269,689 65 813 Cutter, Sibran 2 APA Centennial Airport, CO GA - National 304,259 163,040 54 15,460 Denver Jet Center, Modern Aviation, Signature, TAC Air, The Heliplex 3 HWO North Perry, FL GA - Regional 299,161 201,023 67 1 The Fuel Depot, North Perry Central FBO, Hollywood Aviation 4 TMB Miami Executive, FL GA - Regional 259,976 112,302 43 3,096 Reliance Aviation, International Flight Center, Signature, Advanced Aircraft Center 5 GFK Grand Forks, ND Non-hub 258,777 246,399 95 238 Avflight Grand Forks 6 VNY Van Nuys, CA GA - National 250,779 90,441 36 22,909 Signature, Castle & Cooke, Clay Lacy, Jet Aviation, The Park VNY 7 SEE Gillespie Field, CA GA - National 249,630 157,467 63 658 Golden State, Circle, High Performance Aircraft, GS Jet 8 PRC Ernest A
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From page 28... ...
28 Characteristics of the FBO Industry 2018–2019 When many FBOs were family-run businesses, staff also were family and trained in all aspects of the business, with the expectation that the children would one day take over the business. Fast forward to today and for multilocation FBOs, owned by large companies or private equity firms, staffing is more traditional and hierarchical.
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From page 29... ...
Key Factors Shaping the FBO Industry 29 required all aircraft operating in defined airspace according to Federal Regulation 14 CFR § 91.225 (CFR-2011-title14-vol2-sec91-225.pdf) to install an ADS-B transponder in an aircraft that transmits GPS coordinate data to a ground-based receiver, where they are processed for air traffic control.
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