10-01-1999 Ask Mike! Archive
How economically sensitive are FBO operations?

Mike,
 
I am researching the FBO industry.  Can you tell me how economically sensitive FBO operations are?
 
David
 
 
David;
 
If anyone had any sense, they would stay away from investing in the aviation industry, period. Ok, all kidding aside, it is truly the love of aviation that makes one be in this field. A "full-service" FBO offers many of the following  services.

1. Aircraft maintenance. (If your clientele is primarily business oriented, as opposed to personal pleasure flying, they are going to be requiring use of their transportation, regardless of economic trend; unless, their industry is hit particularly hard by a turn in the economy.)
2. Fuel sales. (Essentially, the same comments as for maintenance. If a person flies for pleasure, the fun things in life are the first to go in tough times.)
3. Flight instruction. (Probably 90% plus people that desire to learn to fly do so because their disposable income allows room for another hobby. The remainder are looking for another mode of transportation for their business. Some of the 90% group, I'd estimate at about 25%, will eventually do business flying. The economy definitely plays a role in this area.)
4. Aircraft rental. (This can fall into two groups, yes, business and pleasure flying). The pleasure flyers generally rent the smaller, two to four place, fixed gear / fixed prop airplanes; the rental can be tough in tight times. The business flyers rent the faster, larger, singles and twins that are productive, point A to point B.  If an FBO has the clientele and resources to offer a spectrum of rental aircraft, they are less prone to economic fluctuation.)
5. Aircraft Sales. (This is a big one. If a niche market is found, say for selling the high performance singles and twins to business flyers that desire more of their own schedule than renting aircraft allows, there is little sensitivity; unless, as in maintenance, their business has taken a turn for the worse. However, thinking regionally or nationally, there are the prospects out there that will keep you busy.)

A seemingly simple question, David, but with complex answers. Generally speaking, if an FBO offers services tailored toward business flyers, but retains the human touch to garner new business from pleasure flyers, this can be a successful industry.
 
Gear green,
Mike