According to Aviation Business Strategies Group (ABSG) principals John Enticknap and Ron Jackson, the results of its annual FBO fuel sales survey were upbeat, and included reports of increased transient ramp traffic recorded by 43 per cent of responding FBOs.

“For the third consecutive year, we've seen an increase in fuel sales from more than half of FBOs responding to our survey,” says Enticknap. “This includes some stand out fuel sales increases of more than eight per cent year-on-date by nearly 20 per cent of the FBOs reporting. This is consistent with informal inquiries we made of numerous FBO operators at NBAA-BACE in October.”

Jackson adds that fuel sales were mostly in sync with business aviaton flight activity as reported by ARGUS TRAQPak, which tracks hours flown by the business aircraft fleet: “For most of 2018, monthly business aircraft flight activity increased incrementally year-on-date compared to 2017, with a slight softening in the last quarter. For the year, flight activity rose slightly registering a 0.9 per cent gain over 2017 while flight hours rose 0.7 per cent for the same period. Although still in positive territory, both flight activity and hours flown seemed to peak towards the end of the year.”

Enticknap goes on to explain: “Another area we like to explore with FBO operators is trying to understand the greatest challenges facing the FBO industry. An open-ended question resulted in these top five concerns: employee retention, fuel pricing, erosion of fuel margins due to contract fuel suppliers, lack of flight instructors and the cost of flying.”

An additional section of the survey deals with gauging confidence in the economy by FBO operators. “We saw a little softening in this area by respondents with 61 per cent agreeing that the economy is headed in the right direction,” Jackson adds. “This is a slight decrease from the 73 per cent recorded last year.”

Based on the survey, interviews with FBO owners and aircraft operators, and analysis of the oil markets and the aviation fuel industry, Enticknap and Jackson have put together the following forecast for the FBO industry for 2019:

FBO operators are bullish on fuel sales in 2019: when predicting fuel sales for 2019 versus 2018, 36 per cent expect to have at least the same fuel sales as in 2017; 53 per cent forecast fuel sales increases of one per cent to eight per cent; and only six per cent expect fuel sales to decline.

There will be slow to moderate industry growth of between one and a half to two per cent in FBO business aviation activities, to include base customer aircraft movements, transient traffic arrivals and gallons pumped. This will closely follow the predictions for the US GDP growth rate for 2019. With slower growth expected in business aircraft flight activity and hours flown, FBO operators should look at every facet of their operation to minimise costs and work more efficiently.

As to FBO industry consolidation, the larger chains have not made substantial moves to expand their FBO networks and there are few signs of megamergers on the horizon. However, some smaller and emerging chains continue to add FBOs sporadically through the acquisition process.

In the oil field, FBOs can expect WTI oil prices to stay relatively low through the first quarter of 2019, hovering between $52 and $58 per barrel. Greater seasonal demand in the second and third quarters should see oil prices rise and levelling in the $60 to $65 per barrel range.

Regarding Jet A fuel costs, Gulf Coast Platts' current price is [at time of writing] $1.84 per gallon and will follow the price of oil, as in the past. With seasonal adjustments heading into summer, ABSG would anticipate Gulf Coast prices to increase to approximately $2.21 per gallon. FBOs will need to be mindful of what is in their inventory and adjust their fuel margins regularly.

And finally, it perceives a trend for FBO selection based on safety standards, with aircraft operators, particularly those flying internationally, becoming more selective when choosing FBO service providers in favour of those with a minimum of at least a safety management system (SMS) and/or an IS-BAH registration designation.