FBO Report

June 8, 1999

FBO Report

A canvass of operators reveals that business is good, but filling employee positions is a common challenge

BY John Boyce, Contributing Editor

June 1999

Business activity is so good in the FBO industry that finding people to handle the business has reached, at least in some areas, critical proportions. Fixed base operators report that sales in all segments of the industry continue to be strong, particularly jet fuel sales. But the optimism that good business breeds is clouded by a shortage of personnel to do the job.

For instance, Tim Hilde, president of aircraft operations at Western Aircraft in Boise, ID, reports that business has been "phenomenal" but feels fortunate to be only ten maintenance technicians short of a full complement.

"It's an acute problem," Hilde says. "We've gone from eight mechanics two years ago to over 40 now. We're still looking for another ten.... The biggest problem is getting technicians."

Vince Dugan, VP of Trego-Dugan Aviation in North Platte, NE, fairly echoes comments of colleagues regarding activity: "There's greater use of corporate jets, and that has significantly impacted us as a mid-continent refueler. We've had significant increases in jet fuel sales and significant decreases in 100 low lead sales. There are fewer and fewer piston airplanes out there and more and more turbines. I expect that to continue. And that has impacted the type of equipment we buy nowadays. We've purchased three new refuelers in the past three years, two of which are jet refuelers."

While the increase in business and the shortage of personnel dominated conversations about the state of the FBO industry for this article, there were some other important issues on the minds of operators. Among those are the ongoing need to educate communities on the benefits of general aviation to, among other things, offset anti-airport groups; uncertainty about user fees; relations with airport owners; and fractional ownership.

Clearly, reports from around the country indicate that the overall demand for maintenance and avionics technicians is far outstripping supply, both of new and experienced people (related article, page 22). However, there appears to be shortages in personnel in all segments of the FBO business including, in some areas, pilots for flight instruction.

"Hiring is a real problem," says Tom Ransom, vice president and general manager at Avitat/Qualitron at Houston's Intercontinental Airport. "Here in Houston it's been a real problem because of the markets."

Even if there was a sufficient supply of incoming A&P technicians, companies with a commitment to aircraft maintenance find themselves struggling to maintain a balance between experienced and inexperienced personnel. "Everybody who is worth anything is being scarfed up by the highest bidder," says Stephen Lord, VP of general aviation services at Wiggins Airways in Manchester, NH. "It's hard with the airlines hiring."

Lord says the airlines lure experienced mechanics away with substantially higher wages than he is able to pay. Consequently, he finds himself, albeit reluctantly, in a food chain-like situation where he, in turn, has to lure personnel from smaller FBOs.

Explains Lord, "We certainly work with the tech schools to get people out of school, but we need to keep a delicate balance so that we don't end up with too big an imbalance between experienced and new people. We end up on the food chain; we get (personnel) from the smaller FBOs that maybe can't pay as much. That gets those owners angry, but I have to stay in business and satisfy my customers."

What Lord does is widespread in the industry (and most industries, for that matter); it's one of the ways things work. But Hilde at Western says, "We can only steal from each other for so long; we're going to have to grow our own." He has taken steps to do just that in maintenance and line service. Western has developed a matrix with different grade levels of technicians and line personnel and a matching pay matrix (see sidebar).

Bob McCreery, president of McCreery Aviation in McAllen, TX, reports that business has been good but not extraordinary, tied as it is to both the Mexican and American economies. McCreery expects that eventually he will feel the impact of the North American Free Trade Agreement, but hasn't yet.

Nonetheless, he's challenged by the dearth of qualified personnel. McCreery Aviation, a family-owned FBO in business for 53 years, has nurtured a good relationship with a nearby A&P school and finds that stability and strong compensation packages work well to retain labor.

Explains McCreery, "We offer competitive wages with good benefits; profit sharing, (a) retirement 401K plan. To the intelligent employees those things mean a lot. In this industry not everyone is able to provide those kind of benefits. That gives us a certain edge in competing for certain employees."

Peter Anderson, president of Galvin Flying Service at Seattle's Boeing Field, says quite frankly that he can't compete with Boeing and Microsoft in compensation of the available labor force, so he is taking a two-pronged approach, which he hopes will have long-term rewards. He's initiated a program of improving the work environment and is rearranging the management structure to invite a cooperative workplace, one in which the workers are empowered to question and make decisions "to make it a place that people want to be a part of." But perhaps more significant, not only to Galvin but to the industry in general, Anderson is taking a long-term, outreach approach to solving the labor force problems.

"We have just brought an employee on staff," Anderson explains, "whose entire effort is going to be community outreach into the high schools, trade schools, and community colleges to promote employment in the industry in maintenance, flight instruction, aircraft refueling.

"We want to get people to strongly consider the variety of career opportunities available in the aviation industry. (To that end) we have just created some intern positions that we are making available to high school students."

That kind of program is becoming almost a necessity. "If you don't go out to them and preach your product," says Louis Beemer, president of Harrisburg Jet Center at Capital City Airport in Harrisburg, PA, "it doesn't get there because people don't think of aviation as a career, for some reason. Don't ask me why."

Charles Priester, CEO of Priester Aviation at Palwaukee Municipal in Wheeling, IL, and the new chairman of the National Air Transporta-tion Association, agrees. "We have to go to the grassroots," Priester says. "We have to create that interest.... I've been involved with Southern Illinois University for years, and I think we made a somewhat fundamental error by putting the focus on mechanics getting Associate or Baccalaureate degrees. Now, that's a very valid requirement for directors of maintenance and so forth, but we did not put proper emphasis on needing people that like to fix things, and you don't need a degree to be able to do that.

"Once the mechanic is ... on the job, we need to work with businesses and schools to make it possible for them to complete their degrees through OJT (on-the-job training)."

Most FBOs report a shift in the nature of the traffic they see. "It's much less general aviation and tending toward corporate aviation," says Anderson at Galvin.

In some measure that is due to growing fractional ownership of aircraft. Concerning fractionals, there's little doubt among FBOs interviewed that it is good for the industry.

Says John Gudebski, president of Patterson Aviation at Executive Airport in Sacramento, CA, of fractional ownership, "It started about a year and a half ago where we see the same jet coming back with different crew members and different passengers. We see a lot of fractionally owned jets coming into Sacramento. I love it."

Says Tim Hilde at Western, "Flight departments are going to fight it tooth and nail, but what the fractionals are doing is making the pie bigger; they're getting more people involved in aviation. I'm sure more than half their customers are first time aviation people. Making the pie bigger ... more pilots, more fuel burning, more maintenance.."