Fixed Based Operations
Fuelling Issues Faced by Fixed Based Operations (FBOs)
Aviation entails air transportation, which is used in moving people and goods from one place to another. Economy denotes a means of generating income as profit. Therefore, when aviation combines with the economy, it becomes a single industry referred to as air transportation business or the aviation industry that offers air transportation. In the aviation industry, the target customers are passengers who expect comfort and safety when using this means. Passengers have various needs that should be met for them to consider a flight comfortable. For instance, passengers expect the cabin crew to ensure that the cabin’s surrounding is clean. Fixed Based Operations (FBOs) are entities that are tasked with offering services to commercial or private airports to facilitate smooth operations. FBOs are significant entities that enhance the smooth provision of services in the aviation industry, particularly at the airport terminals.
FBOs provide aircraft services such as ground handling and field operation (Worrells, Scott, and David 34).The aviation industry requires the services of other entities for effective delivery, for example, the dry cleaning industry that wash carpets and other materials that the aircraft should reuse. Thus, cooperation is essential to ensuring that customers are satisfied. Client contentment is significant in any kind of business because it fosters customer loyalty.
The aviation industry alone cannot undertake all the services at the airport terminals. Therefore, it requires other entities to manage the operations and movement of all the parties to make profits. FBOs are important service providers in the aviation industry because they offer services that are not directly related to aircraft, such as rental cars, lounges, and hotel bookings. Such services are vital to customers’ convenience. The main objective of differentiation of labor is to ensure that passengers can easily access facilities at airports. FBOs face several challenges in the aviation industry. Some of the hurdles are beyond their control while others can be moderated.
The first problem faced by the FBOs is varying pricing policies and business model. In the last 20 years, the aviation industry has witnessed several changes in the fuel pricing policies (Enticknap n.p). The base has altered from bracket prices at the cargo point to different bases in the indexed pricing. The outcome of this trend is that it may decrease the profit margin for the fuel contractor who also is at risk of the rising costs of support and, based on the previous years, a reduction in marketplace. Most of the FBOs have been forced to contract a fuel supplier, for instance, Avfuel (Enticknap n.p). The supplier is mandated with buying the product straight from the refiners as wholesalers and then remarketing the fuel supply to the FBO marketplace. Avfuel offers an effective level of marketing and support to the FBOs regarding other essential services like fuel trucks, credit card processing, and credit services, among others. They undertake all these activities at favorable prices as compared to oil companies. Because of this challenge, FBOs have made transformations in their approach of supplying fuel where oil companies have limited direct accounts. This policy has witnessed a rise in the organization’s Eastern Aviation Fuels, which represents Shell (Davidson et al.17). The other issue affecting fuel prices is contracted fueling. In most cases, FBOs have encountered unbalanced margins that have made them lose their contracts and customers. However, they have responded by fixing their own contract sales price and offering this price to customers. Moreover, the new fuel suppliers’ approach is a significant system that assists FBOs in marketing their fuel with contract fuel programs. In this case, the FBO’s serve as customers’ contact. In any case, FBOs are directly in charge of the customer service experience. For example, when an aircraft’s customers reach a base camp, specific FBOs workers offer them a brand of service. Moreover, this process depends on the client service experience, which determines the quantity of fuel to be purchased. Despite the fact that the fuel supplier offers the organization support services, including marketing and effective purchasing power, only a specific FBO deals directly with customers (Francois n.p.).
The availability and increased pricing of AvGas is another challenge affecting the FBOs in the aviation industry. The increasing prices of AVGas and uncertainty of supplies have resulted from the failure to project the sales and growth of the fuel industry properly. Large amounts of commercial flights are fueled by sustainable biofuels, which play a critical role in environmental preservation (Thurber n.p.). However, the issue is that biofuels are limited in supply. They are also costly because of their high demand and limited supply.
FBOs are advocating for improved operations, for instance, a program that will enable airlines to land in a constant descent. Customarily, aircrafts have been directed to land in a sequence of downward phases. The biggest challenge that faces this initiative is that it enhances burning of more fuel, which has become a scarce and costly commodity (National Air Transportation Association n.p.).
According to National Air Transport Association (NATA) report, the general aviation aircraft in the United States is the only one made up of the Business Aviation segment that utilizes large gallons of avgas and gallons of jet fuel consumed. The FAA predicts that this volume will largely increase in the nation. Programmed U.S. airline carriers only account for around 17 billion gallons every year. Nonetheless, fuel consumption does not increase in line with the rise in Business Aircraft flights, which has been the case in the past. Also, even with the inclination towards superior business aircraft, the newer aircrafts are still considered more resourceful as compared to older generation ones. Therefore, they require less fuel to address the problem that FBOs encounter. All the same, fuel is the biggest contributor to any aircraft’s operating expenditure, and any change in fuel prices has a direct impact on operating cost for any operator, which poses a challenge to the FBOs (Enticknap and Jackson n.p).
Despite the fact that FBOs offer several services, the entities still face a challenge of fuel related to the division of labor, equipment, and facilities, which entail a large capital for delivering the service in line with the present demand. Consequently, the FBO organizations need to stabilize their fuel management approaches in line with the air edict and regulation in the aviation industry to enhance the creation of income. Besides, the income emanating from the passengers, airlines, and other resources should cater for costs, such as purchasing equipment and failure to control fuel concerns can damage their operations. In the air terminals, FBOs also need to increase the service counters for a passenger to reduce the long queues at the check-in counters, purchasing ticket counter, and customer service counter and enhance service delivery.
Davidson, C., Newes, E., Schwab, A., & Vimmerstedt, L. (2014). Overview of Aviation Fuel Markets for Biofuels Stakeholders (No. NREL/TP-6A20-60254). National Renewable Energy Lab.(NREL), Golden, CO (United States).
Enticknap, L., J. (2014). FBOs Face a Changing Environment in Fuel Supplier Relationships: Exploring the New Norm. C-U-KWIK. Davidson, Carolyn, et al. Overview of Aviation Fuel Markets for Biofuels Stakeholders. No. NREL/TP-6A20-60254. National Renewable Energy Lab. (NREL), Golden, CO (United States), Retrieved from http://www.acukwikalert.com/ac-u-kwik-fbo-connection/2013/3/8/fbos-face-a-changing-environment-in-fuel-supplier-relationsh.html.
Enticknap, J. & Jackson, R. A Changing FBO Business Model – “You Can’t Give It Away.” Retrieved from: http://nata.aero/data/files/safety%201st%20documents/etoolkit/safety%201st%20etoolkit%20october2012.pdf
Francois, F. (2017). Aviation Fuel Challenging the Future. BART INTERNATIONAL. Retrieved from: https://www.bartintl.com/wp-content/uploads/2018/01/Bartintl172.pdf
National Air Transportation Association. 2017. The State of the FBO Industry. Retrieved from: http://nata.aero/data/files/gia/nata%20formal%20response%20on%20state%20of%20the%20industry.pdf
National Air Transport Association (NATA). (March, 2017). “The state of the FBO industry. Retrieved from http://nata.aero/data/files/gia/nata%20formal%20response%20on%20state%20of%20the%20industry.pdf.
Thurber, M. (2012). “Avgas issues will take time to resolve.”AIN online. Retrieved from https://www.ainonline.com/aviation-news/aviation-international-news/2012-11-01/avgas-issues-will-take-time-resolve.
Worrells, D. S., Ruiz, J. R., & NewMyer, D. A. (2000). The scope and status of the fixed base operator/general aviation service industry in Illinois. Journal of Aviation/Aerospace Education & Research, 9(3).
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