Talking Business in Orlando

ORLANDO — Some 5,000 representatives of the aviation service sector convened here in late March for the annual Aviation Industry Expo and the annual meeting of the National Air Transportation Association, joined by the Professional Aviation Maintenance Association. Among those in attendance were some 250 management personnel from airport-based businesses who took part in NATA’s reformatted FBO Leadership Conference and a one-day, pre-show airport/FBO symposium co-hosted by the American Association of Airport Executives.

Much of this year’s event focused on business management practices and the ongoing debate in Washington on how to fund the U.S. aviation system. During the airport/FBO symposium, NATA president James Coyne and the vice president of government affairs for the General Aviation Manufacturers Association, Brian Riley, hit hard on their position that new user fees would be a bad idea.

“We believe the Aviation Trust Fund works,” comments Riley, who says the FAA’s proposed increase in excise fuel taxes to 70 cents per gallon is excessive. At the same time, Coyne is calling for more fiscal control at the Federal Aviation Administration. He points to the fact that FAA’s cost for running air traffic control has more than doubled to $8 billion since he took over the NATA helm in 1994.

Coyne adds that one of the key discussion points in the funding battle — the modernization of the ATC system — is being put on the back burner by a number of groups due to the breadth of the FAA’s proposal. ATC, he says, is “the elephant in the room” that no one wants to discuss.

Meanwhile, business activity in the service sector remains strong, according to attendees, although avgas usage continues a downward trend due to fuel prices.

James Christiansen, recently named president of fractional leader NetJets, was particularly bullish about the FBO and charter sectors and sees continued growth among the fractional providers. According to Christiansen, in 2006 there were a total of 7,149 fractional owners — owners, not shares sold.

“We’re going to buy close to 150 million gallons [annually] of fuel by 2008,” he projects. This year that number should be around 135 million gallons, he says. In 2006, NetJets flew some 380,000 hours, not including charter hours it purchased.

“We’re really bullish about the future of this industry,” says Christiansen. “At least for the next few years.” As evidence, he points to the backlog at the business aircraft manufacturers, and he expects many of those units will become part of the fractionals’ fleets.

Leading a discussion on the hot new product now entering the marketplace, the very light jets (VLJs), was DayJet’s customer service director Bill Brown. The scheduled charter firm that will utilize VLJs expects to start servicing five Florida cities within the year, he says.

“We believe we’re going to change the way people travel,” says Brown. DayJet will need partners among airports and FBOs, he says, to meet customer expectations, much as industry has partnered with the fractional providers to deliver a level of service.

One of the key cautions heard for aviation businesses at the show was the ability to maintain margins in a volatile fuel pricing environment. Steve Lee, vice president of operations for Signature Flight Support, comments, “The key to margins is you have to manage them.” That means a clear understanding of all costs, including employees, benefits, and taxes. Lee also recommends refueling companies keep an eye on Platts (www.platts.com), which provides wholesale fuel price information.

Eyes remain on security

On the security front, NATA’s Coyne continues to caution that the U.S. Senate is bent on broadening the Transportation Security Administration’s oversight of general aviation. At the airport/FBO symposium TSA general manager Charlotte Bryan says that the agency is indeed preparing to broaden the ‘12/5 Rule’ which to date governs charter and cargo operations.

“Aviation is still a significant threat,” says Bryan, who expresses concern that the industry may be returning to pre-9/11 complacency.

Byran says TSA is in the midst of a weight-based study to determine how much to expand the 12/5 Rule, with an emphasis on aircraft that because of size are seen as a greater threat. She also relates that TSA is doing a total reevaluation of security requirements for the SIDA (Security Identification Display Area). The reevaluation will look at both commercial and general aviation airports in the process, she says.

FBO Marketing

On the subject of business practices, Scott Fowler, marketing manager with AirBP, offered a broad overview with informational tips to form an original and creative marketing strategy and steer FBO marketing strategies away from “I’m a full-service FBO.”

“There are no true gurus in marketing,” Fowler says. The trick is trying to appeal to the customer’s wants and needs with advertising that causes them to react in 30 seconds or less. In an advertisement, an FBO has to identify its audience and tell them why they should choose the FBO and where they can find it.

Fowler states that it will take about $30,000-50,000 for a company to kick start an effective marketing campaign. The initial investment should be backed by a four- to ten-percent revenue commitment each year that’s dedicated to marketing if the campaign is to be successful.

Fowler refers to show souvenirs as trinkets and trash, an example of marketing money poorly spent. “I don’t like squishy things,” he says. “Spend a little extra. It makes more of an impression.”

Spending money wisely is also applicable to Web and print-based advertising and Fowler stresses the importance in hiring original and creative PR expertise when building a website or constructing an ad. Get the “best media money can buy.

Even though print remains the biggest advertising medium, according to Fowler, he says that one of the most useful tools for an FBO is a company blog [web log]. With a little effort and a simple daily e-blast about weather conditions, current events, and anything else that may be of interest, an FBO “can turn the blog into a new world of communication.”

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