5 Challenges FBOs Face Today
Fixed Base Operators (FBOs) are the backbone of business aviation, providing essential services to private aircraft, crew, and passengers. As we prepare for our 2024 FBO survey, we’re reflecting on some key insights from our 2023 data, which revealed significant challenges that FBOs face. Below are the top 5 challenges from 2023.
#1 Staffing
Staffing continues to be a critical issue in many industries and FBOs are no exception.
Many FBOs underpay employees, which is one of the reason we are including a wage study in our 2024 FBO Survey. We encourage managers to identify rising stars and invest in them through training. Doing this will help them see the value they bring to the team knowing they are being invested in. Many FBOs view line service as a stepping stone or a means of 'paying your dues' to justify lower wages and we strongly discourage this mentality. Team members are handling million dollar aircraft and we need to treat and pay them as professionals.
#2 High Construction Costs - #3 Hangar Space
High construction costs remain a significant challenge for FBOs, particularly in high-demand areas like metropolitan regions. For these FBOs, new hangars can be a strategic investment to accommodate larger aircraft and meet client expectations. However, in less saturated markets, the need for luxury hangars is less clear. FBOs must carefully assess whether such investments are necessary and sustainable in the long term.
While PEMBs offer advantages like shorter construction timelines and lower costs, their prices have been rising significantly and it is doubtful that this will change. When considering new hangar construction, FBOs should evaluate long-term operational costs and sustainability. To assist in this decision, we've included a chart illustrating the increasing costs of PEMBs, highlighting the need for strategic planning and careful resource allocation.
U.S. Bureau of Labor Statistics, Producer Price Index by Industry: Prefabricated Metal Buildings and Components Manufacturing: Prefabricated Metal Buildings and Component Systems (Excluding Farm Service Buildings, Residential Buildings, and Parts) [PCU3323113323111], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/PCU3323113323111, August 21, 2024
As the demand for larger aircraft grows, the lack of hangar space has become a pressing issue. Operators are increasingly forced to seek storage solutions outside major metropolitan areas. However, storage rates in secondary markets have not yet adjusted to justify new construction, adding to the complexity of managing hangar space.
#4 Operational Costs
Operational costs are expected to continue rising. Many independent FBOs undercharge clients, missing out on significant revenue opportunities. Additionally, excess spending due to unmonitored equipment failures, poor hangar maintenance, and lack of preventive measures can lead to unexpected downtime and increased expenses. Hiring an external organization, like Airside FBO, for a business assessment can help identify these issues and optimize operational efficiency.
#5 The Competition
The FBO market is highly competitive, with both new entrants and established players vying for market share. To remain competitive, FBOs must offer exceptional service, refine their business strategies, and continuously invest in their facilities and staff. Details matter and service always wins over price, so make sure you refine your business strategy, which may include a need to reinvest in your FBO. Building strong client relationships, offering unique value propositions, and staying ahead of industry trends are essential for maintaining a competitive edge. Additionally, strategic marketing and branding efforts can help FBOs stand out in a crowded marketplace.
Contact Airside FBO if you would like to participate in the 2024 FBO Survey or sign up for a consultation.
The challenges facing FBOs today are significant, but with the right strategies, they can be turned into opportunities for growth and success. Subscribe below If you would like to schedule a consultation to see if Airside FBO can enhance your FBO!