Aircraft operators might not like it, but some experts say lowering prices to compete with a new FBO on an airport is seen as a recipe for long-term failure and is ultimately bad for customers. Rather, they recommend “staying the course”—maybe even raising prices—as the best strategy for maintaining an FBO’s profit margin and remaining in business for the long term.
This advice comes from bloggers John Entiknap and Ron Jackson, a pair of well-established FBO industry veterans writing in the most recent issue of Acukwik Alert. Acukwik is a legacy guide to FBOs dating back decades to when it was a printed pocket summary of FBO locations and services.
Entiknap and Jackson justify this seemingly counterintuitive advice on the grounds that an FBO’s better customers will show loyalty and recognize that reliability and good service are worth a fair price. The blog cites the 80-20 rule—80% of an FBO’s business is with 20% of its customers. “Marginal” customers will flip over to the new operator to save a little money, but the majority of established operators will stick with the service provider that they know and trust. And even charging “a few pennies” more per gallon to make up the lost business is not as likely to ruffle feathers as some FBO managers might think.
Naturally, this theory assumes that the existing FBO has a good reputation to begin with. And it could be assumed that the theory might not apply to an FBO whose main clientele is of the transient variety.
“An exercise we recommend for all FBO operators,” the bloggers write, “is to keep track of fuel sales by customer name. Many will find that the 80/20 rule holds true where the top 20% of customers represents 80% of the business. With this in mind, an FBO should concentrate on this part of their business. We have found that the truly marginal customers are most likely to complain the most, cause a distraction, and disrupt valuable customer service resources.”
Competition on prices. How about competition on goods and services? Aircraft rentals, availability, staffing, instructors, etc.?
I myself couldn’t care less about the amenities, if the aircraft I’m hoping to fly isn’t available. And at that point, what does prices have to do with it?
What another thing i see are the revolving door of employees. Why bother getting to know someone, when they’re gone in 6 months? How about the FBO addressing that issue?
I’ve bought a lot of avgas over the last few decades and never once said, “Wow, that service was so great, I’m happy I spent more than a self-serve pump” Once, an FBO called me and said a hail storm was approaching and they would gladly put my plane in the hangar for $100/night. That’s probably the best service I’ve ever gotten. Is anyone else getting “service” from an FBO that makes them excited to pay more?
I am sure that the discovery of copper-wire is historically anchored in aircraft owners fighting over the last penny…
However, I doubt that there is any “service” the average FBO could provide, that would justify a fuel price adjustment. Not everyone uses all available services, not everyone buys fuel and not every airplane burns the same.
By my limited math skills, the owner of a Beaver would pay progressively more for a service not used, while the owner of a Kitfox drinks the coffee or benefits from the “service”.
$100 to move a aircraft into a hangar prior to a storm is probably the lowest of the low, however people love to sue other people trying to help them and liability reform lurks around the corner again.
I aggressively seek out cheap 100 LL, and NEVER thought to myself “Oh, it’s worth paying $2.00 more per gallon because KPUB has free ice cream.” OK, that’s an exception, it’s totally worth it, but I fly to KBWP for the $4.27/gallon 100 LL all the time, versus $6.51 at my home drome. Which has banana nut muffins, true… and bananas, and coffee, and a fireplace, and
If 100 bucks is the fee for the hangar that’s fair. It might be even more courtesy to just keep the aircraft safe and say “we provided that service, normally worth 100$, we’d appreciate if we can put that on your bill”.
Well…. Agree, not! Having worked for an FBO, flown corporate and now as a GA owner operator, the whole thing needs a rework.
When I started there was no such thing as user fees. If I went to Butler at a larger airport, well the fuel price was higher. If I could tanker, well I might, but always had the policy of taking ‘courtesy fuel’, showing appreciation for services (to my boss’s chagrin). We picked our FBOs based on service.
Now, no matter what a gun is put to an operators head, ‘buy our over priced fuel and we might waive the ramp fee, or pay the ramp fee.’ At some airports (HPN I’m looking at you) there’s no option to drop or pickup and go without this highway robbery.
The FBOs created this monster, so I say yes, let competitors drive the price of fuel down. Until ramp fees go away, there’s no way to justify paying more for fuel ‘for services.’ The FBOs have created this monster (of ramp fees)
While on the topic, a shout out to Metrea at Wiley Post. Ferrying my new to me Grumman back to the east coast, there was service without the hand out stretched. They EARNED their fees, not demanded them
The article talks about a price difference of a few cents per gallon, not several dollars.
As a transient pilot would you fly a half-hour out of your way just to save a nickel per gallon? Sometimes you’ll spend more in gas just to fly to the “cheaper” gas.
As a based pilot, would you taxi over to the competitor’s fuel farm just to save a nickel per gallon? Is it really worth your time? And would you then expect your home base staff to “hop to it!” and bring you a quart of oil because you found yourself low on preflight?
On long cross-countries I’ll check fuel prices en-route. When it comes to refueling stops I’ll compare prices of nearby airports. If they’re within about 50-cents per gallon of each other I’ll then look at other factors:
In some cases I’ll pay a few cents more in gas just to have more options.
“Beware the person who knows the cost of everything and the value of nothing.”
Several years ago I gave up wrestIing with a fuel hose to fill my Cessna tanks and gladly pay a premium to my FBO. I have no interest in falling off a ladder and breaking my hip, ending my flying days (or life) to save a couple bucks. And my FBO treats me like I was flying a Citation X. I make a call and the fuel truck is at my hangar pronto. And I always tip the young refueler.
My “new” FBO is committed to providing good service. They have never told me “ we can’t do that”. So if they end up not being the cheapest on occasion, I’ll still pay a little more for that rare “can-do” attitude.
Hey, Gipper, I fell off that ladder while wrestling the fuel hose in my Cessna 180. The wing is higher due to the tail wheel and I had to stand on the top of the too short ladder. The broken hip was replaced with a nice titanium device and I was flying again after about 12 weeks.
Most of the places I fly are unattended and have self-service pumps and lower prices but no help if needed. I can’t think of an FBO that made me feel unwelcome or rendered bad service.
A few pennies? Absolutely!
But a couple of dollars? Sorry, guys, no way. When I can fly 75 miles out of the way to an airport with just a self-serve and a bathroom and still save $50, it’s not even close.
We have self serve pumps at my home field and three FBO’s for full service. We liked the cheaper self serve fuel prices but hot starting a big bore continnental can take be easy and sometimes hard taking its toll on batteries, starters, starter adaptors, and pilot’s patience. My plane partners and I decided the extra 50 cents/gal for fuel truck that comes to our hangar is worth it.