National Academies Press: OpenBook

Landscape of the FBO Industry in 2022 (2023)

Chapter: Chapter 4 - FBO Survey Results

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Suggested Citation:"Chapter 4 - FBO Survey Results." National Academies of Sciences, Engineering, and Medicine. 2023. Landscape of the FBO Industry in 2022. Washington, DC: The National Academies Press. doi: 10.17226/27295.
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Suggested Citation:"Chapter 4 - FBO Survey Results." National Academies of Sciences, Engineering, and Medicine. 2023. Landscape of the FBO Industry in 2022. Washington, DC: The National Academies Press. doi: 10.17226/27295.
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Suggested Citation:"Chapter 4 - FBO Survey Results." National Academies of Sciences, Engineering, and Medicine. 2023. Landscape of the FBO Industry in 2022. Washington, DC: The National Academies Press. doi: 10.17226/27295.
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Suggested Citation:"Chapter 4 - FBO Survey Results." National Academies of Sciences, Engineering, and Medicine. 2023. Landscape of the FBO Industry in 2022. Washington, DC: The National Academies Press. doi: 10.17226/27295.
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Suggested Citation:"Chapter 4 - FBO Survey Results." National Academies of Sciences, Engineering, and Medicine. 2023. Landscape of the FBO Industry in 2022. Washington, DC: The National Academies Press. doi: 10.17226/27295.
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Suggested Citation:"Chapter 4 - FBO Survey Results." National Academies of Sciences, Engineering, and Medicine. 2023. Landscape of the FBO Industry in 2022. Washington, DC: The National Academies Press. doi: 10.17226/27295.
×
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Suggested Citation:"Chapter 4 - FBO Survey Results." National Academies of Sciences, Engineering, and Medicine. 2023. Landscape of the FBO Industry in 2022. Washington, DC: The National Academies Press. doi: 10.17226/27295.
×
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Suggested Citation:"Chapter 4 - FBO Survey Results." National Academies of Sciences, Engineering, and Medicine. 2023. Landscape of the FBO Industry in 2022. Washington, DC: The National Academies Press. doi: 10.17226/27295.
×
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Suggested Citation:"Chapter 4 - FBO Survey Results." National Academies of Sciences, Engineering, and Medicine. 2023. Landscape of the FBO Industry in 2022. Washington, DC: The National Academies Press. doi: 10.17226/27295.
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49   Quick Takes The following bullet points summarize the FBO survey results. • More than 700 FBOs were invited to participate in an online survey. There was a 5% response rate from FBOs from 22 states. Half of the respondents were private FBOs and half were pub- licly owned FBOs, with a balanced distribution of FBO size. • FBOs reported a mixed experience with the pandemic. Some had increased flight school activ- ity; some FBOs with non-branded fuel had some difficulty receiving timely fuel deliveries because of driver shortages. Sprayers were choosing ground rigs over aircraft to save costs. Destination markets coped with surging traffic and operations. • There was FBO consensus on near-term challenges: rising prices and wages, hiring and retain- ing staff, high construction costs, and hangar shortages. • For FBOs not owned by private equity and real estate companies, funding for capital projects, declining fuel margins, and user resistance to higher rates and charges are long-term concerns for financial viability. • FBOs have many questions about technical requirements for building infrastructure for elec- trification and the FBO role in servicing electric aircraft, eVTOL hubs, and AAM; the timing of these developments; and the investment required. Introduction As part of the study process for this synthesis, FBOs were contacted and invited to participate in an online survey to gauge how recovery from the pandemic was going and if demand for FBO services had shifted. The survey asked basic questions about FBO ownership and organization, fuel sales, services, staffing, and customer mix. The survey also invited respondents to comment on changes in their operations and challenges they encountered during the pandemic. Survey- Monkey was the online platform used. A copy of the survey is presented in Appendix A. The survey was conducted in July and August 2022. NATA sent invitations to its members that operated FBOs. The invitation list included more than 700 FBO members. NATA sent out an email to invite participation and followed up with two reminder emails. In addition, AAAE sent invitations to members of its General Aviation Committee and Operations, Safety, Planning, and Emergency Management Committee. The principal investigator for the survey personally invited 10 to 15 additional FBOs to participate and followed up. In total, 37 FBOs responded with complete or partially complete surveys. The group repre- sents mostly individual publicly owned or private FBOs. C H A P T E R   4 FBO Survey Results

50 Landscape of the FBO Industry in 2022 Survey Demographics Survey respondents came from 22 states and were evenly mixed, with 17 private FBOs, 17 pub- licly owned FBOs, and 1 university-owned FBO. Table 13 shows the distribution of respondents. Of the private FBOs, five had multiple locations. Six FBOs had changed ownership in the past five years. These were all private transactions except for one FBO, which was taken over by the airport sponsor. Fuel Sales Thirty-three FBOs in the survey offer 100LL and Jet A for sale, either as self-service or full service. None of the FBOs as of August 2022 were offering unleaded Avgas, SAF-blended jet fuel, or Mogas. Table 14 reports on full-service and self-service fueling. Based on previous work done for ACRP Synthesis 108, FBOs that only offer self-service 100LL appear underrepresented in this survey. State Private Airport University Total Responses Alabama 1 1 Arizona 1 1 Arkansas 1 1 California 2 2 Colorado 1 1 Florida 2 3 5 Georgia 1 2 3 Illinois 2 2 Kansas 2 2 Mississippi 1 1 Montana 1 1 2 Nebraska 1 1 Nevada 1 1 New Hampshire 1 1 New York 1 1 North Carolina 1 1 Ohio 1 1 Oklahoma 1 1 Texas 1 2 3 Utah 1 1 West Virginia 1 1 Wyoming 2 2 Total 17 17 1 35 Table 13. Survey respondent states and ownership. Full Service Self-Service Jet A 33 6 100LL 31 13 Total Responses 33 Table 14. Types of fuel offered for sale.

FBO Survey Results 51   Table 15 shows the relative size of jet fuel sales for survey respondents. The sample is a bal- anced representation of differently sized fueling operations. Table 16 shows how FBOs responded when asked to compare the volume of Jet A fuel sold in 2021 with sales of that product in 2019. More than 60% reported higher jet fuel sales in 2021. The other FBOs had about the same volume of fuel sales or lower. Table 17 reports on 100LL fuel sales in 2021. It is noteworthy that so little 100LL was sold by this group of FBOs—42% sold less than 50,000 gallons; two-thirds of respondents sold less than 150,000 gallons. The fuel sales experience for 100LL during the pandemic is evenly divided, as Table 18 shows. Thirty-two percent of respondents had in 2021 about the same fuel sales as in 2019, a little less than one-third of FBOs sold fewer gallons of 100LL, and almost 40% of respondents were selling more 100LL than in 2019. 100LL Fuel Sales Respondents Percent About the same as 2019 10 32 Lower than 2019 9 29 More than 2019 12 39 Total Responses 31 100 Table 18. 100LL sales in 2021 compared to 2019. Gallons of Jet A Respondents Percent 250,000 gallons or less 8 25 250,001–500,000 gallons 8 25 500,001–1,000,000 gallons 6 19 1,000,001–2,000,000 gallons 3 9 More than 2,000,000 gallons 7 22 Total Responses 32 100 Table 15. Gallons of Jet A fuel sold in 2021. Jet A Fuel Sales Respondents Percent About the same as 2019 4 13 Lower than 2019 8 26 More than 2019 19 61 Total Responses 31 100 Table 16. Jet A fuel sales in 2021 compared to 2019. Gallons of 100LL Fuel Respondents Percent 13 42 9 29 5 16 4 13 50,000 gallons or less 50,001–150,000 gallons 150,001–250,000 gallons 250,001–500,000 gallons More than 500,000 gallons 0 0 Total Responses 31 100 Table 17. Gallons of 100LL fuel sold in 2021.

52 Landscape of the FBO Industry in 2022 The FBO survey took place midway through 2022. Respondents were asked how fuel sales were shaping up in the first six months of 2022. Table 19 shows a mixed response: overall, fuel sales for half of the respondents were up in 2022 from 2021, but some FBOs reported that sales were dropping off a bit. The observation that activity was leveling off in the second half of 2022 is a consistent thread throughout the survey. Following are some direct comments from respondents to the survey. They reflect many dif- ferent experiences with the pandemic recovery. • “Budgeted jet fuel gallons were $208,000 for the first 6 months. Actual gallons sold were $236,438. The Avgas budget for the first 6 months was $125,000. Actual was $141,061. We are purchasing fuel more frequently and have added an additional jet fuel truck simply for additional storage.” • “Jet A sales are ahead of same period 2021 and a little behind 2019. 100LL is behind 2021 and by 40% compared to 2019. Our airport has experienced a large growth bubble in local business near or at the airport, which is driving corporate traffic. Flight schools make up majority of Avgas purchases, and their activity appears to be down from a fuel perspective.” • “In the first 6 months of 2021, we sold 18,301 gal 100LL and 97,293 gal of Jet A. In 2022, we sold only 11,246 gal and 42,990 gal respectively. Our fuel suppliers have had a hard time get- ting trucks because of driver shortages. More businesses are using technology for meetings because flying is less cost effective. The ag sprayers are choosing ground rigs over aircraft to spray their crops.” • “Fuel sales are expected to surpass 2021 fuel levels. Peak season (football season) will signifi- cantly impact sales.” • “Following the same yearly trends, just with a smaller volume.” • “Still strong but slightly off 2021, which was 30% greater than 2019.” • “Fuel sales for Jet A are up this year. Avgas has dropped a bit, mainly because the price has increased so drastically since February.” • “Fuel sales for both Avgas and Jet A are lower so far this year than in previous years. Avgas has also been difficult to get in our region.” • “We were ahead of our 2021 pace but have had a significant drop over the last 30 days.” • “Still robust, with our sales up approximately 6%. However, we are starting to see some reduc- tions in overall gallons sold.” • “Fuel volume grew more than 40% in 2021 and is about 20% higher thus far in 2022, but since May, sales have been flat compared to the prior year. It is honestly a welcome sign. The rate of growth was unsustainable, and now we can catch our breaths and better prepare for the winter Fuel Sales in 2022 Respondents Percent* Lower than 2019 1 3.8 Better than 2019 but lower than 2021 2 7.7 About the same as 2021 3 11.5 Lower than 2021 4 15.4 More than 2021 10 38.5 Ahead of 2021 but dropping off 3 11.5 Jet A more/100LL less 2 7.7 Jet A less/100LL more 1 3.8 Total Responses 26 100 *Note: Numbers do not add up to 100% due to rounding. Table 19. Outlook for fuel sales in 2022.

FBO Survey Results 53   tourist season in 2023. We are projecting a slight 5% decline in 2023 due to customers settling into post-COVID norms, fuel price volatility, and general economic concerns. Disruptions in airline service will continue to drive activity towards GA.” Other FBO Services Table 20 describes FBO services offered by respondents. Notable results are that different solutions are applied to provide catering services. Most FBOs did not change services offered during the pandemic, but several commented on more internal cleaning and procedures. FBOs that experienced increases in private jet activity had to hire additional staff. Customer Mix Figure 25 shows 29 responses to the question, “What percent of your customers are business versus leisure?” Sixteen of the FBOs reported more business customers than recreational. One FBO provides services to the military, and another supports flight training (both recorded as “other” in the graph). When asked if the customer mix changed during the pandemic, 28 FBOs responded: 54% said no change; 46% said the customer mix had changed. Fourteen FBOs commented on some of the changes. FBOs located in metropolitan areas that are traditional business destinations reported a decline in corporate customers. Others reported more leisure travel and groups of family and friends sharing the cost of a charter flight. FBOs commented on increased charter and fractional FBO Provides FBO Does Not Provide FBO Subcontracts Different Airport Tenant Provides Airport Sponsor Provides Courtesy transportation 27 0 2 1 4 Ground services 27 0 1 2 4 Hangar rental 24 1 1 4 7 Concierge 19 7 2 1 1 Rental cars 13 2 9 8 0 Maintenance, repairs, and parts 11 5 0 16 2 Catering 10 3 15 4 0 Aircraft management 7 13 0 9 0 Aircraft leases or sales 6 15 1 6 0 Airport management 6 9 0 2 18 Flight training 5 8 0 19 1 Aircraft cleaning and detailing 4 11 6 8 0 Aircraft painting, interiors, and modifications 3 18 1 6 0 Avionics sales and services 3 12 1 12 1 Aerial tours 0 21 0 8 0 Service Table 20. Other airport services.

54 Landscape of the FBO Industry in 2022 aircraft activity. There were aircraft used for combined business and leisure travel. Corporate board meetings were accomplished remotely, so this dedicated travel disappeared. One FBO involved with pilot training said that demand for new pilot training increased markedly and required the FBO to invest in additional staff and aircraft to support the demand. FBOs where there was little change in activity reported an unchanged customer mix. Outlook for the Remainder of 2022 FBOs were asked if they had experienced a surge in private aviation in 2021 and whether this level of activity has continued. Twenty-three responded and their comments are summarized in Table 21. Six reported no surge at all. Most said the surge is continuing, but at a slightly lower level in 2022. Individual comments included: • Charters and fractional activity remain strong. • There appears to be some tapering because international travel has opened. • High fuel prices and inflation may be dampening travel. • One FBO reported a return to full strength in its high-altitude testing program following a quiet year in 2021. 0 10 20 30 40 50 60 70 80 90 100 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Pe rc en t Respondent Business Leisure Other (Military, Flight Schools, , , Law Enforcement) Figure 25. Reported customer mix. Surge in 2022 Respondents Percent Surge Continues 10 43.5 Slight Decline from 2021 6 26.1 Surge Ended/Back to 2019 Levels 1 4.3 No Surge 6 26.1 Total Responses 23 100 Table 21. Has the private aviation surge continued in 2022?

FBO Survey Results 55   Near-Term Challenges Twenty-nine respondents addressed and ranked some of the greatest challenges in 2022. A weighted average was used to identify priorities in which “very important” issues were assigned 3; “somewhat important,” 2; and “not important,” 1. Table 22 reports on these issues, with rising prices and wages, hiring and retaining staff, fuel margins, and hangar availability ranking as critical challenges. Other challenges for 2022 included as open-ended responses were: • Airport and FBO working jointly to initiate and fund new hangars and FBO facilities. • Rising fuel prices affecting certain customer groups. • Keeping pace with inflation and being able to pass higher costs on to customers. • Construction challenges on existing projects. • Growth in private aviation increasing community concerns about noise and pollution. • Limitations on pipeline capacity or fuel truck availability making it challenging to maintain fuel levels. • FBO consolidation increasing large-chain operators’ ability to set prices and negotiate with individual customers using their FBOs. Challenges in the Next Five Years Table 23 ranks the top challenges in the next five years reported by 29 survey respondents. The number-one challenge for operators was securing sufficient funding for updated FBO facili- ties and infrastructure. Except for two, FBOs answering this question are not owned by private investment companies and funds. The second- and third-ranked challenges involve fuel sales and margins. Half of respondents sold less than 500,000 gallons of jet fuel in 2021, and 61% of Very Important (3) Somewhat Important (2) Not Important (1) Weighted Average Rising prices and wages 23 5 1 2.76 Hiring and retaining staff 22 4 3 2.66 Fuel margins 21 6 2 2.66 Hangar availability 19 9 1 2.62 Need for new facilities and infrastructure 19 7 3 2.55 Availability of capital 18 5 6 2.41 Local community support 11 10 8 2.10 Security 5 16 8 1.90 New aircraft sizes and technology 5 14 10 1.83 Changing customer base 1 22 6 1.83 Shifting demand for FBO services 6 11 12 1.79 Integrating new aircraft fuels 5 11 13 1.72 Competition from other FBOs 6 8 15 1.69 Succession strategy for FBO ownership 7 5 17 1.66 FBO lease renewals 5 4 20 1.48 Challenge Table 22. Near-term challenges ranked.

56 Landscape of the FBO Industry in 2022 respondents sold less than 150,000 gallons of 100LL. Interestingly, electricity capacity and pre- paring for AAM were the lowest-ranked challenges for the next five years. The last question in the survey explains why. Timeline for Electric Aircraft Table 24 reports on respondent expectations about when they will need to be ready for elec- tric aircraft. This group does not appear to be particularly concerned with AAM; in fact, one respondent commented: I am not yet convinced AAM and eVTOLS are the future. Worldwide, helicopters have limited market penetration. What makes these so different? There is nowhere near the vertiport space/infrastructure needed to scale this up to a level that would appear to make it viable. Community acceptance of this new mode of air travel is not receiving adequate attention either. Lastly, FBOs do not know how to prepare. We need more guidance from OEMs and the FAA. It appears that companies engaged in research and development of AAM are hopeful about the advent of electric aircraft (See Advanced Air Mobility discussion in Chapter 3). At this point in time, FBOs have adopted a wait-and-see approach. About one-third of those surveyed think they need to be ready for electric aircraft within five years; the rest think that FBOs have at least five or more years to prepare. It may also be the case that smaller FBOs will be later adopters of this technology than larger FBOs. There also seems to be a lack of clarity about how best to prepare for electric aircraft on the ramp and about who is responsible for increasing electricity capacity. Very Important (3) Somewhat Important (2) Not Important (1) Weighted Average Funding for new or updated FBO facilities and infrastructure 18 9 2 2.55 Greater volumes of jet fuel sold at contract rates 14 11 4 2.34 Increased self-fueling/tankering by high-volume fuel customers 11 10 8 2.10 Integration of new unleaded Avgas and SAF into fueling operations 7 13 8 1.96 Expanded coordinated services offered by FBOs using networks and alliances 6 12 11 1.83 Competitive pressures from low-price fuel sold at nearby FBOs 5 14 10 1.83 Sufficient electricity and related infrastructure to support electric aircraft 3 17 9 1.79 FBO opportunities to support advanced air mobility operations 4 13 12 1.72 Challenge Table 23. Next-five-year challenges ranked. FBO Readiness to Serve Electric Aircraft Respondents Percent Within the next 3 years 4 14 3 to 5 years 5 17 5 to 10 years 12 41 More than 10 years 8 28 Total Responses 29 100 Table 24. Timeline for FBOs to be ready to service electric aircraft.

FBO Survey Results 57   Wrap-Up on the FBO Survey Given the diversity of the FBO industry and the continued dominance of FBOs with one to three locations, the survey provided insights into the smaller segment of this industry. In many respects, survey respondents confirmed that gains in private aviation experienced during the pandemic were not shared by all FBOs or airports. That said, recreational destinations and pilot training centers fared quite well. The survey was conducted midway through 2022, and many FBOs observed good to very good levels of activity in 2022, but pandemic gains started to flat- ten out midyear. Some locations reported difficulties obtaining fuel deliveries, especially 100LL. None of the survey respondents reported selling unleaded Avgas or SAF blends. (Most FBOs that use these fuels are on the West Coast or in the Midwest.) Last, for publicly owned and single- location private FBO respondents, funding for capital improvements was the number-one chal- lenge. Number two was maintaining fuel margins, and three was the ability to pass on increased costs to customers and stay competitive.

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In 2020, ACRP Synthesis 108: Characteristics of the FBO Industry 2018–2019 described the characteristics of the fixed-base operator (FBO) industry using data collected in 2018 and 2019. The objective of this synthesis was to follow up ACRP Synthesis 108 by examining selected recent and current trends in the aviation industry and their impacts at FBOs.

ACRP Synthesis 129: Landscape of the FBO Industry in 2022, from TRB's Airport Cooperative Research Program, investigates how general aviation fared during the COVID-19 pandemic and how FBOs, as the principal service agents for the industry, met pandemic challenges and addressed changes that predated COVID-19.

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