www.wingsmagazine.com

Features Operations
FBO Report 2007

Full ramps and hangars, but caution is the word of the day!


September 27, 2007
By Rob Seaman

Topics

374-fboThe FBO business will always measure its success by two precarious and
fluid factors – demand based on market conditions and customer service
success or failure. In both cases, some of the contributing elements
are easily defined and controlled, while others are not. The one
certainty is that when ramps and hangars are full, folks are busy and
cash flow (the key to any business plan) is keeping the world as it
should be for the present. Just about every ramp is packed today and
the hangars are full – with waiting lists to boot. The OEMs are quoting
multi-year waiting lists for new aircraft deliveries and resale brokers
are expressing high confidence in continued sales to first-time and
upsizing clients.

So
the FBO business must be good? Today, most report that this is in fact
the case. And tomorrow looks fine too. But looking further downstream,
and planning for the years to come is the challenge. A crystal ball is
probably the best tool here because, as anyone in this side of the
business knows, our FBO industry is tied so closely to the US economy
that we really cannot be any clearer than mud right now with respect to
our own future. Guarded optimism is best for the present.

Shell
Canada’s Craig Andries, manager aviation, gives a good overall view
when he states: “Not unlike other businesses, (the FBO market in
Canada) is a demanding, competitive market with little room for error.
Customers’ expectations continue to grow and meeting and exceeding
those expectations remains an ongoing challenge. The market seems to
have fully recovered from the devastating 9/11 events, and prospects
for the future are optimistic in both general and commercial aviation.
I think most, if not all people in the industry are naturally
optimistic. It seems to be the nature of our customers – we share that
optimism.” Andries points out that unforeseen events such as 9/11 or
SARS can have a devastating impact on the industry in general, the
Canadian market, and ultimately FBO operations. In his opinion, these
are reactionary events that leave little to no preparation time. “One
can only absorb and manage these events successfully if historic
operating practices have given permission to do so. Are your costs well
managed? Do you have the right relationships with your customers? Do
you have the right team to move through these challenges?” Looking at
his own team and the network of 50 FBOs that Shell works through in
this country, he believes that their operating principles have enabled
them to succeed despite changing business conditions – as evidenced by
their historic performance through natural and unnatural business
cycles.

Planning for the future is clearly on the agenda for
most of the larger corporate FBOs. Last year, Landmark Aviation (a
Shell Canada dealer in three sites in Canada), purchased Executive
Aircraft Ltd. in Vancouver and immediately began preparing the hangar
for customers, said Byron Gray, Landmark Aviation regional
vice-president, FBO operations, Western Region. The hangar has been
resigned and complements the company’s existing Vancouver facility, a
full-service, 24/7 FBO that offers 190,000 square feet of hangar,
office and terminal space. Landmark is now considering possible changes
for the facility in advance of the 2010 Olympics.

At Toronto
Pearson International Airport, Landmark recently completed a
refurbishment of an exclusive VVIP flight lounge, said Jim McNeill,
regional vice-president, FBO operations, Eastern Region. For VVIP
clientele, Landmark’s Toronto FBO offers an exclusive flight lounge.
Landmark is the only aircraft services provider in Canada to offer a
facility that ensures travellers’ privacy, security and comfort. The
flight lounge and prearranged services are designed for single-customer
use.

Back at YVR is another group distinguished as specialists
in corporate aviation support – the team at Million Air led by general
manager Ron Forbes. “We are very pleased with the traffic that the FBO
had this past year,” he said. “We have seen close to a 30% increase
each of the past two years and are very optimistic we’ll see another
increase in traffic this summer.” As for the health of corporate
aviation today, Forbes believes that the industry as a whole has made a
nice recovery but that it still hasn’t peaked. “We have seen a steady
increase in the fractional business and that introduces more and more
people into the market so I don’t think you’ll see a slowdown any time
soon.”

In terms of upgrades and facility improvements, this past
winter Million Air’s sister company, Penta Aviation, a Bombardier and
Raytheon Service Centre, moved into Module B. The significance of this
is that while they have always had the maintenance operation on the
field, it will now be that much more convenient for their customers to
have maintenance located within the same building. As for immediate
expansion, Forbes advises that they don’t see a present need to expand.
Although space is tight, they still have some hangar and office
accommodations available. They now are operating at 80% capacity, which
gives overflow to the Service Centre and hangar space for itinerant
customers when required.

One increasingly important part of the
FBO world is training and staff development. Million Air starts the
process by putting potential hirees through its Talent Plus selection
process. Talent Plus is a tool used to select employees best suited for
the position they are seeking. “We feel we can train anyone to do the
physical aspects of the job, but what we are really looking for people
who get excited about taking care of our customers,” says Forbes. After
hiring, employees go though the Million Air Orientation program, NATA
Safety 1st training, Firefighting and Product Integrity, just to name a
few.

As one of the 19 Air BP fuel network FBOs in Canada,
Million Air and all the Air BP dealers are committed to service
excellence through training and development curriculum. As the branded
fuel provider, Air BP take this a bit further than most and offers its
training on a broad basis to the industry as a whole. Throughout the
year, US side of the Air BP will be holding open courses entitled Air
BP Fuel Handling & Quality Control Seminar Series. These sessions
cover Risk Management, FBO Operations & Line Service Training, Fuel
Quality Control Field Testing & Proper Receipt Procedures, Fuel
Specifications, Distribution & Filtration Misfueling, Fuel Farm
& Refueler Preventative Maintenance, Ramp Safety & Security
Training, 14 CFR Part 139 Section 321 Fire. The courses take two days
and are open to everyone. They are held at strategic locations
throughout the US at a cost of US$395 (free Training for Air BP
Dealers) and provide a great alternative for smaller FBOs that may lack
the resources or demand for inhouse programs.

Skyservice, with
three Esso Avitat locations, continues to grow and refine its service
and support offering too. Last year was the first full calendar year
for it to really get into developing and refining its new Calgary
acquisition. Jean Langevin, vice-president customer care, Skyservice
Aviation, reports that generally they are very busy but he cautions
that they cannot take for granted any of their business. “Customers are
getting quite knowledgeable on all aspects of their own cost structure
so they are now looking for value with service just edging out cost as
the decision driver.” Langevin, who is also chairman of the CBAA’s
board of directors, believes that the overall market will continue to
grow in the single digits. “It remains very cyclical and subject to
economic turmoil. Bizav is doing well overall and is tied to economic
activity and stability. The market is sensitive to economic performance
obviously, but also to regulatory and security issues.” In terms of new
additions or facility growth, he says that Skyservice is mostly in a
sustainability phase. “We are investing in upkeep, renovation,
equipment renewal and staff training. We are continuously challenged to
meet transient hangar demands due to our high occupancy rate, however
we have been successful in meeting expectations. The market is very
dynamic with companies growing and changing – requiring us to be very
agile in managing their needs.”

Still on the subject of Avitat
in Canada, the Ottawa facility saw a change of ownership this year and
now is operated by JPD Aviation Ltd. James Paul, the firm’s president,
advises that they are busy, but he has to watch the bottom line and
manage costs. Paul cites changes to the traditional profit centres as
the reason for this. In the coming year, he is projecting modest growth
of 3.5-5% and does not foresee a slowdown in the near future. With that
optimism as his guide, they are in the process of getting some
substantial FBO upgrades in place – new hangar doors, additional ground
equipment and as many as four additional staff. The renovation should
be completed by the end of 2007.

On the east coast, Irving Oil,
while unquestionably one of the smallest of the branded chain operators
in Canada, has its own unique operational nuances and appropriate
success. Cindy Millet, retail aviation sales manager, Irving Aviation-
/Irving Oil Marketing Ltd., says that overall, because their FBOs
specialize in serving transatlantic flights, most flights come on a
quick turn. So for them, hangar space is not as critical as ramp space,
and they have flexibility with their airports for overflow parking.
Most of the flights they support are international with a US-vs-foreign
split of 75/25%.

Generally, Millet says that business is busy
and holding its own for profits and costs. As for future planning, with
GA flights through Gander anticipated to increase in the 3-5% range in
the coming year – and industry indications that the growth is still
increasing – “We replaced our former Gander FBO building with a new,
larger facility, making it the most modern FBO in Atlantic Canada.” The
new FBO has added amenities such as snooze areas, a private smoking
room and deluxe washrooms with showers. Millet is quick to point out
that while small in scale compared to the large FBO chains, having only
three locations, Irving has made a name for itself through consistently
providing world-class service.

Support and sustainable growth
for corporate aviation is obviously one of the recurring themes at
present. In its effort to create and work to a 10-year plan at Pearson,
the Greater Toronto Airports Authority (GTAA) has undertaken a
substantial research of the industry today – and for tomorrow. Through
a third-party firm, it is interviewing tenants and users to determine
the face of corporate aviation in the coming years – and accordingly
what lands and facilities should be in place. While this is just one
airport, it is the key business aviation terminal in Canada and a major
portal to the global corporate community. For an organization like the
GTAA to undertake this sort of planning, and address this business
sector so seriously, shows the importance of FBOs and corporate
aviation.

For those who like to put some forethought and
planning into shows and conventions, you might want to note April 8-10,
2008 on the calendar. That is when Airport Expo 2008, the show
specifically designed for the FBO and airport industry, will kick off.

The
show is currently booked for the Las Vegas Mandalay Bay Resort and
Casino. The event will take place every two years focused on the needs
and interests of ground ops and also include terminal equipment in the
adjacent hall.

Developed and produced by trade expo specialists
Mack Brooks Exhibitions, this is not their only airport show. The same
Mack Brooks Group currently produces three other aviation focused
gatherings – Inter Airport Europe, Inter Airport China and Inter
Airport India. Inter airport Europe (the worlds largest airport expo)
takes place every two years and it is planned that the US Airport Expo
will take place in the intervening years so as not to clash with the
European event.

Company representative Justin Akinleye, sales
manager for the Americas, says this event has been developed at the
request of both FBO operators and their support equipment supply
industry as a means to focus on the needs and interests of this sector.
In particular there is a unique outdoors exhibit area adjacent to the
hall where ground support equipment and vehicles can be seen in their
natural environment. So unlike the larger, more established events like
the NBAA, Airport Expo will provide the FBO and airport operators with
both a trade show area and seminars that are focused on their
interests. There is even talk about a possible equipment hands-on area
for demos and testing. This is once again, a signal of the maturing of
the FBO industry and professionalism that has come to be the norm for
this important and growing support and service business.

So how
is the FBO world in Canada this year? It looks pretty good today. And
tomorrow looks okay. But as for a year from now – guess we’ll have to
wait and see what that brings.