Long Beach Report

Long Beach Report

Operators remain upbeat despite a slower first quarter

By John F. Infanger & Lindsay M. Hitch

June 2001

LONG BEACH, CA — "All businesses are running on thinner and thinner margins," observes an FBO fuel supplier, yet most operators remain guardedly bullish about the prospects for business and general aviation. Such was the general mood at this year’s joint NATA-PAMA convention and Aviation Services & Suppliers Supershow (AS3), held in May on the West Coast. Here’s a review of discussions, seminars.

In all, several thousand representatives of fixed base operations, FAR Part 135 charter firms, repair stations, and flight training schools took part in the meeting, sponsored by the National Air Transportation Associa-tion and the Professional Aviation Maintenance Association.
Overall, the industry reps indicated a minor slowdown in business during the first quarter, and cargo-related business in particular has been slowed for some time. Observers expect to see a continuing of FBO consolidation, although that arena has slowed in recent months. At the same time, operators are optimistic about the prospects for airline, business, and personal flying.
A question that remains in the minds of many is the impact a significant economic downturn would have on the fractional business that has transformed the business sector in recent years. United Airlines, however, signaling that there is much opportunity in the fractional market, announced that it will enter that arena over the next two years. And the leader in fractionals, Executive Jet, announced at the show that it had ordered 50 more business jets from Galaxy Aerospace. (Following the show, it was announced that General Dynamics, parent of Gulfstream, intends to purchase Galaxy.)
Incoming NATA chair Jim Christiansen, president of TAG Aviation USA, which is a partner in the CitationShares fractional program, welcomes United’s entry into the fractional fold. "It lends another degree of credibility to what we do," he says.
Operators at the show also reiterated their ongoing concern about rising insurance rates and the potential negative impact, particularly on the smallest shops.

TECHNOLOGY & FBO SERVICES
The NATA convention included a session on current and future technologies and their impact on FBOs. The discussion which followed the presentation brought up concerns that FBO managers are facing in light of technological advancements.
According to Paul Meyers of the Denver-based Aviation Management Consulting Group, FBOs use technologies from four major areas: computers/computer systems, internet, wireless communications, and traditional phones and fax machines. Those technologies are used for fueling, management/operations, weather, and flight planning.
Meyers anticipates conveniences from other industries may work their way into FBO management. For example, e-tickets and Internet seat assignments in airlines and touch screen applications in restaurants may be adapted to the needs of FBOs.
"All of these advances are about communication and getting it right the first time," says Meyers. "People plus technology equals a level and quality of service."
Although online reservations systems are a helpful concept, session attendees feel that their logistics sometimes make it more difficult to do business. Users hope for one website that can do it all, rather than needing to visit numerous websites to plan one trip. And with many of the online programs, FBOs still have to take the information from the web page and input it into their systems. The goal of many online reservations programs is to save time, and it appears that they do not yet do so in the eyes of many FBO operators.
Another recurring concern is the cost of these services. Business operators need to see obvious improvements in efficiencies and service before they are willing to shell out money, and for those programs requiring subscription fees those efficiencies may not be worth the cost, say participants.
On an unrelated online note, a number of websites have begun offering fuel rate information. Session attendees express concern that the price of fuel often depends on a number of factors including volume and affiliations. Flight departments may choose one FBO over another based on flat-rate fuel price quotes that may not be accurate for their situation.