More than half of the fixed base operators in the U.S. and Canada—56%—recorded increased fuel sales in 2019 compared to a year ago, according to a survey by the Aviation Business Strategies Group (ABSG), although there are “turbulent times ahead.”
The number of FBOs reporting an increase in fuel sales in 2019 rose 2% from the previous year, according to ABSG, which conducted a survey of FBOs in January 2020.
Results from the January survey showed an optimistic FBO industry environment with 73% of respondents feeling confident in the U.S. economy.
“There’s no question that 2019 proved to be a very upbeat and positive year for the FBO industry,” said John Enticknap, an ABSG principal. “The survey showed a continued incremental increase in fuel sales for the fourth year in a row for the majority of responding FBOs with a healthy 19% of FBOs surveyed reporting an increase of more than 8%.”
Fuel sales were mostly in line with aviation business flight activity as reported by Argus International’s TraqPak, which tracks business aviation fleet flight hours, ABSG said. Flight activity rose 0.9% in 2019 compared to the previous year, while flight hr. rose 1.3% for the same period.
“Flight activity for Part 91 operators, the bread-and-butter group for FBOs, saw 2.3 million hrs. flown in 2020 representing an increase of nearly 36,000 hrs. over 2018,” said Ron Jackson, an ABSG principal.
In the survey, 80% of respondents say they will not be offering sustainable alternative fuels while 3% say they will and 17% were undecided.
“Frankly this response does not surprise us,” Enticknap says. “SAF is still very new to the FBO industry and there are concerns among operators as to the availability of the fuel as well as a cost factor.”
Looking ahead, however, SAF will become mainstream as more aircraft operators adapt and adopt its use, which will increase demand at FBOs, he says.
According to the survey, top concerns of FBOs include staffing shortages; fuel margin management with pressure from contract fuel suppliers and fuel programs; higher operational costs; rising airport fees and taxes; and environmental legislation and political landscape.
In January, a record 73% of respondents said the economy was headed in the right direction compared to 61% in 2019.
Before the COVID-19 outbreak, travel bans and a turbulent oil market, ABSG expected to see a moderate 1.5% to 2.0% growth in FBO business aviation activities in 2020, including aircraft movements, transient traffic arrivals and fuel pumped.
Now, because of uncertainties, ABSG said it will not attempt to forecast industry growth in 2020 until there is a clearer picture of world health and the economy.
Larger chains of FBOs have not made recent substantial moves to expand their FBO networks, although some smaller and emerging chains continue to acquire FBOs sporadically, it said.
The group expects oil prices to be turbulent through the first half of 2020. As COVID-19 concerns ease in the second half of 2020, China’s demand for oil will increase, ABSG predicts. It looks for more stabilized pricing with moderate increases back to the $50 per barrel range later this year.
“Our guidance to FBO operators is to stay the course, conduct business as usual, keep an eye on your margins and continue to provide a safe environment while delivering an exceptional customer experience,” ABSG said.
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