Of FBOs and rethinking the business model ...
When this magazine was founded in 1986, the FBO industry was at its depth of depression. It got worse. In the early ‘90s, in the midst of a recession, it got even more bleak. But the industry changed. And along came fractionals.
The transformation of the FBO industry in the past 15 years has been nothing short of phenomenal. Then the financial crash of 2008 came, and business aviation put on the brakes.
A general estimate is that corporate aviation dropped 30 percent in a year. With all the high-dollar FBO acquisitions of late, the start-ups, and the level of activity, one would assume there would be more fallout among fixed base operators. It seems to be a question that’s out there.
Say some, FBOs have become lean and mean and will weather the storm. The fallout will be minimal.
Others, however, see a different scenario. A regional fuel supplier says, when thinking of more rural general aviation airports, the fallout will be “huge”. He, like others, see municipalities or other airport sponsors taking over FBO services by default. Self-serve could become the norm for more and more GA airfields.
Then there are those who see a big FBO restructuring about to happen. Among those count George Schuler, subject of this issue’s Business Profile.
Says Schuler, “There’s going to be a 25 percent fallout, everybody tells me. The people whom I respect feel like there’s going to be a huge fallout in 2010 and 2011, at both ends of the spectrum. The airports that have multiple FBOs … are going to have a shrinkage because there just isn’t the same amount of business. And, the mom and pop FBO that was out in the country … that sector has been shrinking for a long time. That’s going to continue.”
What’s also interesting is that Schuler thinks that now that the industry is no longer on steroids, as he puts it, maybe it’s time to go back to the model of building the business from within.
Says Schuler, “I’m thinking about putting a flight school in. I’ve been in the business 30 years, and back then the way you built an FBO was you became a Cessna, Beech, or Piper dealer and marketed your airport by the dealer brand. That created fuel sales and traffic; and that created airplane sales and maintenance for your shop. You kind of built it up by the bootstraps.
“So maybe we’re going to have to go back to the basics and be all things to all people.” That, he adds, could include partnerships with other companies, including a flight school, and giving serious consideration to the emerging light sport aircraft.
During the past 20 years, the trend was for FBOs to focus on line operations and property management, which likely will continue. However, Schuler’s comments reflect the mood of the industry, which has become one of rethinking everything — and getting off steroids.
Thanks for reading.