With increasing public scrutiny of corporate flight departments, coupled with plummeting fuel sales and a weakened economy, activity at fixed base operations nationwide is down, and the business is changing. Moreover, general aviation has been targeted by proposed Transportation Security Administration security regulations feared by the industry as not only expensive but ineffective. Nevertheless, customer service remains paramount to maintaining market share and managing an increasingly unpredictable business environment.
From a business standpoint, the signs of a sluggish economy have become progressively evident. The National Business Aviation Association (NBAA) has canceled this year’s Asian business aviation conference (ABACE), and has shortened its light aircraft show by a day. At NBAA’s annual trade show last October, despite hosting the event’s largest ever static display, Showalter Flying Service, located at Orlando Executive Airport, saw a 25 percent decline in fuel sales from the NBAA show held there in 2006. The business was down every month except October in 2008 compared with the year before, says chairman Bob Showalter.
Showalter Flying Service has divested itself over the years; once a full-service FBO, now primarily a fuel and hangar provider, housing tenants that offer additional services.
A transient center surrounded by three neighboring airports, the Showalter family business is a nearly 64-year-old operation.
The FBO manages four aircraft under contract, and each owner has reduced flying. Showalter attributes recent “lousy business levels” to last year’s record-high fuel prices, the recent economic downturn, and a damaged public image of business aviation.
Showalter was able to maintain market share, managing about 68 percent of the airport’s market, yet volume has gone down significantly. “The fallout has further sharpened in the last 60 days,” says Showalter. “We are watching our dollars in every category.” Company sales were down 13-18 percent month to month compared with last year until November saw a 28 percent drop, and December, 36 percent.
Relates Showalter: “Those are huge numbers. I think now we fine-tune our performance, practice smart operations, and hope the business doesn’t descend further. If it does, the next thing we have to do is cut hours and services.” The company’s number of employees is currently down 10 percent from last year.
A Business in flux
The reduction in business flight activity has affected all profit centers, from fuel to charter, explains John Wraga Jr., executive director of the Independent Fixed Base Operators Association (IFBOA). Wraga has more than 30 years of aviation experience; more than 20 years in FBO management, nine years of airport management, and five years consulting FBOs.
The goals of the IFBOA are to give FBOs the resources and buying power to compete in the marketplace, and to help ensure a community focus, flexibility, and the autonomy of a local business operator, explains Wraga. A grassroots operation, the association began just over two years ago and had just shy of 400 members in 2007.
According to Wraga, member businesses are down 23 percent on average, and everybody is cutting back on costs. “The business is changing, and that change will last awhile,” says Wraga. “We are telling our members to adapt; not hunker down or get defensive, but adapt to the business.”
In Orlando, fuel sales have been hit hardest at Showalter, with other services down as well. With less flight hours, businesses are seeing a decline in service numbers across the board.
Pat Epps, president of 48-year-old Epps Aviation, based in Atlanta, GA, says the economic recession has fuel sales down 16-25 percent from 2007. Fuel dropped some 17 percent during the last four months, which probably means fuel was down 25-50 percent earlier in ‘08, relates Epps.
Charter operations have been hit even harder at Epps, and aircraft sales began to dry up last October and continued through December.
Aviation Continuing Education, Inc. announces a partnership with the IFBOA to provide all facets of required training for FBOs and associated companies.
Kim Showalter heads up Showalter Flying Service based at the Orlando Executive Airport, site of the upcoming 2005 NBAA Convention's Static Display of aircraft. The event that was originally...