I was out at the new RDU GA Terminal (very nice by the way) and was watching the folks at JetSouth and Piedmont doing there thing and started thinking.
Does anyone know where FBOs make most of their money? Is it tie down fees? Fuel? Other services?
And what makes you choose one FBO over another when you visit an airport with multiple FBOs? Service? Ammenities?
Signed,
Cirrus Owner Poser (couldn’t figure out what to put for the A)
It depends on the FBO but, for most, it is fuel. If they do a lot of maintenance, then it is like a car dealer and they make money there. There is NO huge maney maker at most FBO’s.
Brian,
I have looked into the financials of several FBO’s for possible purchase. Most have a hard time making money. The margins are thin.
Fuel is the major revenue source. As much as $1.00 per gallon on LL 75 cents per gallon on Jet A. Most FBO’s need to pump at least 500,000 gallons a year to provide the typical services you would see at good FBO.
The second source of revenue is hanger and tie down fees. Most FBOs do not do repair but may lease space to a mechanic. Less liability.
Of course there are other items pilot supplies, catering, GPU service etc, hat also create a small amount of income.
So, is it better to fill up 1 GV per day or 30 guys flying single engine planes? Most FBO’s want to cater to both, jet traffic is limited at many smaller fields.
Mason
Fuel is where FBO’s make their money. Back when I was looking to do an FBO (about 6 months ago) wholesale 100LL was around $1.18 per gallon. Add fuel excise tax and it was up around $1.50 per gallon wholesale. Could reasonably sell it then at $3.00 per gallon. It costs 75 cents a gallon to put in the plane at 500,000 gallons per year. Hence the reason you get about a 50 cents per gallojn break on self serve.
Also, most jet A is sold to fractionals that are very savvy in buying fuel. They are getting a deal but the FBO’s suffer.
All told, I think our profit margin was going to be around 12 to 14% before taxes, interest, and depreciation. More of a lifestyle business but it can be profitable.
If you are interested in the business, email me and I will put you in touch with someone whom you should consult with before doing anything. I can also send you a copy of our business plan. The general rule of thumb is to never own an FBO at an airport you would not fly to your self. In other words, make sure it is a decent place to go in the first place.
BTW, we lost the deal in a bidding war with another company. They out spent us on infrastructure (at least they agreed to, the money hasn’t been spent yet) by $1 million. Foolish expenditure in my opinion as the ROI will be very small if it is even a postive number with that much capital outlay.
Hope this helps,
Mark
Brian,
Thanks for your reply. Not sure if you know (and I am sure it varies) but how much do they make on a gallon?
Brian
It does vary but I know of one place where it is $0.50 a gallon and another whrere it is close to $0.75.
In reply to:
Brian,
Thanks for your reply. Not sure if you know (and I am sure it varies) but how much do they make on a gallon?
Brian
It depends on how you define ‘make’.
They may be pumping it out of the truck and charging $1.25/ gallon more than they buy it for, but it’s not all profit.
Jerry
Yup. They make it on Avgas, Avgas, and Avgas. From speaking with an FBO owner, the gross margins decrease as additional services (rental, instruction & maintenance) are added. While the overall net profit may increase in dollar terms, the margins are by far and away the highest in avgas.
There is also the issue of the other services increasing the avgas sales.
Mark… I would be interested to learn more about owning an FBO. Please pass along a copy of your business plan etc. Thank you very much. jcpma3@gmail.com Best, JC
Like owning an airplane . . . sometimes it’s better not to know. When I asked a similar question about Santa, and the Easter Bunny, I wished I hadn’t asked.
Sometimes . . . reality hurts.
FBOs make money by stealing and reselling my wheel chocks.
Brian,
I own a very small FBO and have spoke with many others owners. For the most part, the money is in Jet A. In my case I mark up 100LL between .35 and .50 per gallon. After the 2% credit card fee, it does not leave much profit. Then throw in the debt service on a fuel tank worth $130,000. There is really no profit in 100LL, at least in my case. Jet A mark up is closer to $1.00 per gallon, with the same credit card fees, etc. I offer full service for Jet A and self service for 100LL. The jet drivers do not want to fuel themselves, and I don’t blame them. In reality, the FBO is a hobby not a money maker.
Tony
Thanks for being our enabler!
If I ran an fbo, I would want to emulate Wilsons in Memphis, Charlotte and now Chattanooga…they are the absolute best (next to yours I am sure). The owners father started Holliday Inn and they take a “hospitality” approach…last time I refueled there, as I was about to leave, they brought out a small cheese tray and told us to enjoy our flight…first time I ever got “catering” in a Cirrus…probably cost them 10.00 but made us feel like VIPs! Tell you the truth, I have no idea how much we paid for fuel, but, I’ll go back…they don’t discriminate between jets or pistons…they all park in front and get a red carpet!
Happy flying,
John
I reside in Chattanooga, TN but keep my planes 10 miles away in a smaller, less restrictive airport named Collegedale, TN (FGU). I wanted to see Wilsons’ new Chattanooga (CHA) FBO. I drove over instead of flying in…a Wilson greeter met me at my auto, shook my hand and gave me a personal tour of their facility (which BTW is over the top). Service…these folks invented it!! You owe it to yourself, your passengers and your plane to visit a Wilson location.
Mike Brown
John,
My venture into the FBO business was mostly my default. We did not have anyone that wanted to provide fuel at our airport, so I jumped in just to have the service available. Our FBO is very small, most of our business is from May to October. This year I will sell about 6,000 gallons of 100LL and about 35,000 of Jet A. I certainly won’t get rich on the FBO, but I really enjoy the fllight crews and hanging around the airport.
Wilsons FBO sounds like the perfect FBO to emulate. Unfortunately, I have seen more FBO’s with bad service than good. My approach is to do anything I have to do to make the flight crew and passengers happy. Most of our jet traffic comes to a local resort that takes care of the passengers, so I make sure we focus on the flight crews. For GA planes, I try to provide the same level of service, but I am not at the airport all of the time. I have let pilots use my truck for a week, driven them a couple hundred miles to catch a commercial plane or to get a part, invited them to stay at my house, etc. I think most remember the good service. The cheese tray is a good idea. I usually have a tray of fresh chocolate chip cookies for the passengers when they depart.
I think you are right about the fuel costs, although I try to keep the cost lower than any of the closer airports, services is what brings planes back. I have jets that will leave Butte (30 miles away) and fly to our airport for fuel. Our costs are usually much lower and the FBO in Butte is well known for poor service. He is the perfect competition.
Tony
Like Denver Air at BJC in Denver their main competitor Stevens Aviation went belly up a few months ago so Stevens jacked up their fuel prices and charges $100 hangar fee for a Cirrus. I heard they charged a guy $135 to move his TBM 100 feet.
Nothing like a monopoly in a big metro area airport.
I’ll be in Chattanooga in about a week. I’ll be sure to stop in at Wilsons and tell them they’re getting a lot of good press on COPA. Hopefully I’ll have my own to add as well.
I visit Twin Bridges often - usually stop at billings for rest( seems I always arrive in afternoon when thunder is rumbling) on the way in and fuel on the way out (twin bridges at like 4.5k’ and 4k’ runway dictates less than full tanks…
where ru located? Maybe I could stop by your place instead…
John
John,
We are about 50 miles northwest of Twin Bridges, 30 miles east of Helena. Our identifier is 38S. We would love to see you visit. If you need to rest I have a lounge, crew car and a hangar for your plane. Deer Lodge has a great car museum with over 120 cars. Let me know if you are in the area. Tony
