National Academies Press: OpenBook

Landscape of the FBO Industry in 2022 (2023)

Chapter: Chapter 5 - Conclusions and Future Updates

« Previous: Chapter 4 - FBO Survey Results
Page 58
Suggested Citation:"Chapter 5 - Conclusions and Future Updates." 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.
×
Page 58
Page 59
Suggested Citation:"Chapter 5 - Conclusions and Future Updates." 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.
×
Page 59

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.

58 The FBO industry remains a diverse group of enterprises that have vastly different charac- teristics and business models. For the most part, all FBOs provide fueling and aircraft services, parking, hangars, and customer care. That is where similarities end. In ACRP Synthesis 108, the universe of FBOs was divided into groups primarily by ownership and number of locations. A third dimension that is relevant and became especially important during the COVID-19 pan- demic is customer and aircraft mix—the FBO’s market. COVID-19 accomplished the unexpected: it temporarily closed the commercial aviation system. What became evident was that certain segments of the GA markets could survive in these extreme situations—the private cabin-class market, pilot training, and essential air-reliant businesses that did not shut down. Private aviation prospered because it could offer a more con- trolled cabin space and provided an alternative to commercial flights. Pilot training continued because it was an essential service and the industry needed more pilots. Airports supporting air-reliant businesses that need just-in-time deliveries—such as banks, grocery store chains, and manufacturing plants—also experienced stable and sometimes increased traffic. Local economic activity to a large extent determined the impacts of COVID-19 on an airport and its FBOs. In many ways, the pandemic created favorable conditions for large FBO chains to expand. These included limited commercial aviation during the initial stages of the pandemic; fear that air travel contributed to the spread of COVID-19; and new private aviation activity, particularly to vacation markets. Most large FBO chains are owned by private equity firms and infrastructure funds, whose main strategy is to build and operate networks of FBOs that complement each other and offer economies of scale. The pandemic was the perfect storm that ushered in the third wave of mergers and acquisitions documented in this synthesis. COVID-19 focused attention on new FBO markets. Stay-at-home orders and homeschooling made it possible for some to work remotely. In late 2020, demand for second homes doubled from the previous year, helped by historically low mortgage interest rates and the fact that desti- nation locations in the United States were accessible during the pandemic (Strum, 2020). Vaca- tion spots such as Aspen, Colorado; Cape Cod, Massachusetts; Coeur d’Alene, Idaho; Jackson Hole, Wyoming; Lake Tahoe, California; Naples, Florida; and Palm Springs, California, experi- enced high population growth. The flow of new visitors and residents to these locations markedly raised the level of airport activity and contributed to increased costs for housing. There was also an uptick in investment and acquisitions of FBOs in those vacation spots, where second home purchases translated into increased demand for private aviation. This phenomenon was present at both public and private FBOs. Publicly owned FBOs experienced the same swell of activity as private FBOs, provided they were in the right community. Based on the degree of new invest- ment in hangars and FBO facilities in those towns, FBO owners are hoping and counting on second home locations becoming frequent or full-time residences. C H A P T E R   5 Conclusions and Future Updates

Conclusions and Future Updates 59   The objective for this synthesis was to examine the landscape for FBOs in 2022. A lot of change took place within the FBO industry during the pandemic. Many FBOs, large and small, sup- ported essential air-reliant activity when commercial air service shut down. It was more difficult to gauge the landscape for airport-owned and private FBOs that serve the sprawling active piston aircraft fleet, given their large number. Additional research would help understand and build on their unique stories. Future research about the FBO industry could include: • An update using AirNav and 5010 data of the FBO database started in 2018. • A guidebook that assists airports with methods to validate local hangar demand, to conduct financial feasibility studies for new construction, to investigate different business models for paying and managing new hangars, and to adjust rates and charges so that they reflect actual costs and market rates. • An annual FBO survey that focuses on specific segments of the industry and has sufficient resources to recruit a greater number of participants. • A larger effort to reach and interview airport-owned and small independent FBOs, recogniz- ing that enough interviews must be completed to show the diversity of experiences from FBOs across the country. Unlike the commercial sector of aviation, the FBO industry is mostly in private hands and requires extensive original research to document trends. If AAM comes to fruition and there are more electric aircraft in the skies, FBOs are likely to participate in this new mode of trans- portation in meaningful ways. For this reason alone, ongoing monitoring about how new fuels, technologies, and aircraft will be integrated effectively into airport and FBO operations is of great interest to the airport and the FBO communities.

Next: Appendix A - FBO Survey »
Landscape of the FBO Industry in 2022 Get This Book
×
 Landscape of the FBO Industry in 2022
MyNAP members save 10% online.
Login or Register to save!
Download Free PDF

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.

READ FREE ONLINE

  1. ×

    Welcome to OpenBook!

    You're looking at OpenBook, NAP.edu's online reading room since 1999. Based on feedback from you, our users, we've made some improvements that make it easier than ever to read thousands of publications on our website.

    Do you want to take a quick tour of the OpenBook's features?

    No Thanks Take a Tour »
  2. ×

    Show this book's table of contents, where you can jump to any chapter by name.

    « Back Next »
  3. ×

    ...or use these buttons to go back to the previous chapter or skip to the next one.

    « Back Next »
  4. ×

    Jump up to the previous page or down to the next one. Also, you can type in a page number and press Enter to go directly to that page in the book.

    « Back Next »
  5. ×

    To search the entire text of this book, type in your search term here and press Enter.

    « Back Next »
  6. ×

    Share a link to this book page on your preferred social network or via email.

    « Back Next »
  7. ×

    View our suggested citation for this chapter.

    « Back Next »
  8. ×

    Ready to take your reading offline? Click here to buy this book in print or download it as a free PDF, if available.

    « Back Next »
Stay Connected!