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Boxed In

Business at major FBOs is on the rebound. But operators are confronted by new cost and capacity concerns.

October 1, 2007  By David Carr

228-boxedRAMPS ARE FILLING UP and hangars are bursting at the seams at major
FBOs across Canada. The return of N-registered airplanes frightened off
by last year’s SARS epidemic has contributed to a 50% yearover- year
increase in business at the Piedmont Hawthorne Toronto Shell
Aerocentre. “Approximately 85% of our business is American,” said
Andrew Storey, general manager. “When SARS hit, that business
disappeared overnight.”

while other FBOs are not reporting such dramatic turnarounds, all agree
that business is on the rebound. It is unlikely, however, that recent
growth is going to spur a fresh round of expansion, at least not on the
service side. “The issue is going to be hangarage rather than
additional fuelling services for the foreseeable future,” predicted
Gordon Peters, president of Kelly Western Shell Aerocentre in Winnipeg.

managers admit that FBO service capacity at Canada’s busiest airports
is at a comfortable level with business largely split between an Esso
Avitat and Shell Aerocentre with a smattering of independents. There
are exceptions such as Vancouver where independent Penta Aviation
Services – a Chevron dealer – recently joined the Million Air chain.
“There’s always been strong FBOs on the field in Vancouver,” said Ron
Forbes, general manager of Million Air Vancouver. “You’ve got to keep
your service up and give the customers exactly what they want just to
compete on this field.”

Exactly what the customer wants is
something of a moving target. As more clients ‘tanker’ fuel where they
are based (particularly American operators anxious to sidestep higher
Canadian prices and taxes) FBOs are searching for new revenue streams.
“We look to subsidize our incomes through ancillary services such as
adding 15% to the cost of newspapers, or giving a rent-acar company
exclusivity in exchange for 10% on each car that goes out,” said
Vaughan Fleming, general manager of the Ottawa Shell Aerocentre.


can’t make money on everybody who comes through the door – at the end
of the day it is whether you have done a good job on everything, so we
have to become more unique in finding new revenue sources,” Fleming

“We are entering into a new way of doing business,”
agreed Storey. “Apart from aircraft activities such as hangars, fuel
and catering, there are new demands for Internet access and wireless

Million Air Toronto, an Air BP dealer at Buttonville
Airport, for example, has recently upgraded its pilot lounge by
installing a PC station with internet link for operators to access US
weather reports. It also offers wireless service throughout the
terminal. "We are constantly upgrading our service," said franchise
president Derek Sifton.

In addition to expanding the number of
services offered, FBOs are aggressively mining the landscape to
increase the number of aircraft served. “One thing about FBOs is you
can’t survive on corporate alone,” said Fleming, whose client mix
includes government aircraft, military, freight and couriers. Winnipeg
is expecting an increase in the natural resources sector. “There are
forecasts of a busy summer with northern exploration and hydro
development,” confirmed Peters. “I wouldn’t say they are our core
business – more of a bonus.”

The next round of new business for
FBOs in major Canadian cities such as Toronto, Montreal and Vancouver
is likely to be international. “We’re already seeing that now with the
size of the aircraft,” Storey pointed out. “More Global Express
aircraft and more Gulfstreams – the industry is getting to the point
where you will have one large international market.”

Forbes is
more cautious. “We all hope more international traffic is going to come
into Vancouver – and we have seen some signs of that. But the US market
is going to remain the bread and butter. That’s the market we have to
chase right now.”


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