FBOS in focus

FBOs have been around for longer than the jet engine. But as business aviation evolves, how will FBOs change? Words: Alud Davies

FBOS in focus

FBOs have been around for longer than the jet engine. But as business aviation evolves, how will FBOs change? Words: Alud Davies

APART FROM HACKNEY Carriage licences that London’s black-cab drivers have to hold, it is hard to think of an industry where the original name means as little now as Fixed Base Operators (FBOs) – the places where you board and leave private aircraft. After all, when was the last time you flew from a Mobile Base Operator?


The birth of the FBO, as we know it today, came about in 1926 when the US put in place the Air Commerce Act. Before this, civil aviation was unregulated, with much of the flying done in old military aircraft flying from place to place, often to perform at air shows in the towns that they flew into. This meant that many of the aircraft, and the mechanics who flew with them, were transitory, especially as before 1926 there were few airports in the US.


As aviation began to grow, the US government sought to bring in regulations, with the Air Commerce Act introducing the licensing of pilots and maintenance technicians, as well as trying to standardise training practices.


With the Act coming into effect, many of the travelling pilots and airmen saw the opportunity to establish permanent businesses in the airports that were being built all around the US. The term FBO was coined to distinguish the fixed operators from their barnstorming counterparts.


The early FBOs were almost unrecognisable from those of today, although they offer many of the same services. In its simplest form, an FBO is where a visiting aircraft can park and be refuelled, and if needed, have some basic maintenance performed.


Nowadays FBOs are much more complicated, and are often sprawling complexes with hangars, multiple aircraft-parking ramps, and services akin to an hotel. But even if all FBOs were the same, there are cultural differences in FBOs in different parts of the world.


“It makes a big difference in how you design your FBO, how you handle people and how you train your staff,” says Ettore Poggi, group FBO director, ExecuJet. “In places like the Middle East and Africa, they look for much more intimacy and privacy and a bit more luxury. But in other more heavily GA-orientated [General Aviation] markets like Europe and the US, people expect a little bit less, simply because everybody is in a hurry. But nevertheless, I think that they do appreciate if there is some finesse.”


There is also a big difference between how FBOs make money around the world, with FBOs making most of their money through fuel sales. “The US model for all FBOs is for services to be wrapped into the price of a gallon of fuel, and then hangar space on top of that,” says David Best, senior vice president and general manager for regional operations in the US for Jet Aviation. “Outside, in the rest of the world, the model tends to be dominated around handling fees, which makes fuel sales more of a third-party service, rather than a core income pot.”

“In places like the Middle East and Africa, they look for much more intimacy and privacy...”

Modern FBOs offer services akin to an hotel.

Going bigger

Splitting services

One of the ways that FBOs are changing is out of necessity, rather than by design. As aircraft evolve and get larger, the space needed to park them, as well as the size of the hangarage needed to keep them, is also expanding.


“Some of these large-cabin aircraft now have wingspans of 100-plus feet and obviously very high tail heights of 20 feet. So now you have a market that has an evolving platform that you are servicing and an infrastructure base that was built over time,” says Best. “We are investing a lot into infrastructure right now, and a lot of that investment is around the evolving market, because aircraft are getting bigger.”


Betsy Wines, vice president Customer Service and Human Resources for Teterboro-based Meridian agrees: “Manufacturers are building these larger and larger aircraft to meet this more global need from customers.

Unfortunately, people’s ramps haven’t gotten any bigger. We built a new hangar and moved into it about two years ago, and we already know that the Bombardier Global 7500 clearances might not even happen.”

North American FBOs and international ones have very different business models. FBOs in Africa, Asia, Europe and the Middle East typically charge for handlings. North American ones typically just add a margin to fuel.


ExecuJet’s Poggi believes we could see a split with FBO services, much as we have seen in the airline world, with full-service and low-cost carriers.


“I think it will vary from region to region, but I certainly think that the FBO of the future will follow two streams,” says Poggi. “One is the ultra-luxury stream where people are willing to pay to be pampered, and then another stream where people will want all of the modern communications at will,” adds Poggi.


The concept of full service and no frills versions of FBO services might be attractive to some, but Best says that Jet Aviation’s customers have come to expect a certain level of service. “We run to a set of Jet Aviation standards and processes and service standards. Effectively our customers expect a level of service and certain facilities that we can provide for them. So, it's not something that we're looking at,” says Best.


Wines agrees with Best, saying that she’s never heard anybody expressing an interest in a trimmed down service experience. “I don't see that as a possibility. I find even the people who come in here who have just moved into the private jet side of flying expect a certain level of service,” says Wines. “I haven't come across anyone that's looking for that bare bones experience. They tell us they appreciate having someone right there to greet them and help them with their bags and take care of their reservations.”

Going bigger

One of the ways that FBOs are changing is out of necessity, rather than by design. As aircraft evolve and get larger, the space needed to park them, as well as the size of the hangarage needed to keep them, is also expanding.


“Some of these large-cabin aircraft now have wingspans of 100-plus feet and obviously very high tail heights of 20 feet. So now you have a market that has an evolving platform that you are servicing and an infrastructure base that was built over time,” says Best. “We are investing a lot into infrastructure right now, and a lot of that investment is around the evolving market, because aircraft are getting bigger.”


Betsy Wines, vice president Customer Service and Human Resources for Teterboro-based Meridian agrees: “Manufacturers are building these larger and larger aircraft to meet this more global need from customers. Unfortunately, people’s ramps haven’t gotten any bigger. We built a new hangar and moved into it about two years ago, and we already know that the Bombardier Global 7500 clearances might not even happen.”

Splitting services

North American FBOs and international ones have very different business models. FBOs in Africa, Asia, Europe and the Middle East typically charge for handlings. North American ones typically just add a margin to fuel.


ExecuJet’s Poggi believes we could see a split with FBO services, much as we have seen in the airline world, with full-service and low-cost carriers.


“I think it will vary from region to region, but I certainly think that the FBO of the future will follow two streams,” says Poggi. “One is the ultra-luxury stream where people are willing to pay to be pampered, and then another stream where people will want all of the modern communications at will,” adds Poggi.


The concept of full service and no frills versions of FBO services might be attractive to some, but Best says that Jet Aviation’s customers have come to expect a certain level of service. “We run to a set of Jet Aviation standards and processes and service standards. Effectively our customers expect a level of service and certain facilities that we can provide for them. So, it's not something that we're looking at,” says Best.


Wines agrees with Best, saying that she’s never heard anybody expressing an interest in a trimmed down service experience. “I don't see that as a possibility. I find even the people who come in here who have just moved into the private jet side of flying expect a certain level of service,” says Wines. “I haven't come across anyone that's looking for that bare bones experience. They tell us they appreciate having someone right there to greet them and help them with their bags and take care of their reservations.”

“I haven’t come across anyone that’s looking for a bare bones experience.”

Modern FBOs offer services akin to an hotel.

Fuelling the future

One thing that is clear, though, is that in the future, FBOs will all have to cater for the use of Sustainable Aviation Fuel (SAF). There is a movement towards the industry using SAF, but the main barriers are availability and pricing. SAF is only available in a select few places, and the prices where SAF is available are often double that of regular fuel. According to AirNav.com, Jet A prices within 25 miles of Teterboro Airport average out at around $7.78 per gallon. Using a Gulfstream G650 as an example, the aircraft burns around 452 gallons of fuel per hour. That puts the fuel cost per hour in the region of $3,516, so on an eight-hour transatlantic flight, the fuel costs alone would be $28,132.48. With sustainable biofuels costing around $16 a gallon, the fuel prices for that eight-hour flight double to $56,265.


Best says that Jet Aviation does make use of the SAF that it has access to at its Los Angeles-Van Nuys facility. But he adds that he’s seeing a chicken-and-egg situation. “The more it is used, the more economic it is to produce. And, in turn, the more economic it is to sell. So, we are at this sort of phasing-in stage at present, where we take it where we can get it, but we also have to balance the cost to the customer and, of course, the cost to ourselves.”


But it is not just SAF that FBOs need to prepare for. In the future there are alternative means of aircraft power looming in the shadows. For Poggi and ExecuJet, one of those alternative means is electric aircraft. Although Poggi admits that we are a long way off from seeing aircraft powered by electricity using FBOs, especially aircraft that can fly long distances, he still says it is something that FBOs need to be prepared for.


How FBOs can make money from electric recharging is still unknown. In the US, prices for electricity vary wildly between states, with an October 2019 survey by Choose Energy saying that the cheapest electricity in any US state can be found in Washington, where it costs 9.67 cents per kWh. At the other end of the scale is Hawaii, where it costs 30.78 cents per kWh.


That regional difference is much higher than with the Jet A fuel that business jets use. According to AirNav.com, the average price of Jet A around the Seattle area is $4.87 a gallon, whereas around Honolulu it is $5.04.


“At the moment, electric aircraft are still undergoing tests, but only for short-range flights. But you know that technology will develop over time and we need to be able to cater for it,” said Poggi

FBOs the world over – from Meridian’s Teterboro base (above) to ExecuJet’s Cape Town FBO (below) – are evolving in response to the fast-changing business environment.

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Alud Davies,
CJI Editor,
Corporate Jet Investor

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Alud Davies,
CJI Editor,
Corporate Jet Investor