June 16--Aviation fuel prices may be putting a squeeze on fixed base operator businesses at Salina Municipal Airport as they compete with other mid-continent stops for business jet traffic.
Prices are among the factors contributing to a drop in fuel sales, Tim Rogers, executive director of the Salina Airport Authority told the authority board Wednesday morning.
A nearly 54,000-gallon drop in fuel sales last month amounted to roughly $3,700 less in revenue for the airport authority, compared to 2010. The authority charges a fuel flowage fee of 6.89 cents a gallon.
During May 2010, 195,859 gallons of fuel were dispensed at the airport, compared to 141,986 during the same month this year.
Salina competes with other airports for business travelers crossing the middle of the United States to stop and refuel.
"There is other competition," Rogers told the airport authority board.
In some areas, particularly at Tulsa International Airport, "steep discounting" has been noticed.
"Other operators are discounting almost at cost," Rogers said.
The FBOs at Salina, Flower Aviation of Salina and America Jet, "had a rough month," he said.
Price is among the factors. The website AirNav.com on Wednesday showed retail full-service jet fuel prices from 60 cents to 89 cents a gallon less than prices posted at Salina.
Flower Aviation was charging $5.59 a gallon. Legacy Jet Center in Tulsa posted $4.70 a gallon.
"They have an unfair advantage, from my perspective," said Doug Livergood, general manager at Flower Aviation.
"They don't charge sales tax on their fuel," he said. "In Oklahoma or Texas, there's a 45-cent difference."
For fuel sold in Salina, the sales tax amounts to 8.2 percent.
To cut costs, Flower Aviation stopped offering service around-the-clock last month.
"Most flight departments will look at a 45-cent difference and still not come to Salina. Hardly anybody will," Livergood said.
He doesn't know why there are such steep price differences.
"You can't make money with those kinds of margins, can't run a business," Livergood said. "I would guess that the recession has brought the worst out of everybody. Everybody is scratching to make a buck. That's my guess."
Posted retail price is only part of the picture, Rogers said. Business travelers are likely receiving even lower prices by contracting with FBOs.
"Most operators of business jets are working to negotiate prices for less than what is published as a retail price. That is another factor that is more complicated to explain," he said.
No one knows what kinds of short-term or long-term contracts have been inked by the FBOs, Rogers said.
Marketing efforts are meant to "differentiate the FBO in the market," he said. "Price is a factor, but price is not the sole factor."
Those same price factors were in place during 2010, he said, but fuel sales at Salina were still up 6 percent. Airport activity historically drops in May.
"It comes back and we do see a peak again in June," Rogers said.
Two Canadian Air Force units will spend four weeks training in Salina and at the Smoky Hill Air National Guard range, he said, which will help fuel sales.
"My conclusion is that overall jet fuel prices have increased and there has been some effect on business jet activity," Rogers said. "But it appears that aviation fuel prices will stabilize through the balance of the summer."
Livergood noted that Wednesday was among his best days in months.
EAS providers discussed
In other news from the airport authority board meeting:
n Rogers reported that he met with Great Bend officials regarding SeaPort Airlines' bid to be the Essential Air Service provider in that community.
Great Bend is among the western Kansas towns providing comment to the U.S. Department of Transportation regarding their EAS contracts. The DOT has extended the comment period to July 15, Rogers said.