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Does the US government need to intervene in the market to ensure reasonable public access and transparent pricing in FBOs?

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The brand factor

How important is FBO branding? Adam Twidell, CEO of PrivateFly, explores what a merger between two of the world’s biggest FBO chains means for the industry

 

Signature Flight Support's acquisition of Landmark Aviation will substantially increase the company's FBO network 

 

 

Following the news last month that Signature Flight Support and Landmark Aviation are to merge, the brand factor in FBOs has been brought into sharper focus.

BBA Aviation – owner of Signature – is proposing to buy its rival Landmark in a US$2.065bn deal. With Signature and Landmark two of the world’s biggest chains of FBOs, the deal would make the combined group the world market leader by quite some distance.

This is one of the biggest industry consolidations we’ve seen for some time and follows other recent mergers in various subsectors of our industry – from manufacturers to airports and aircraft operators (read more about acquistions in the July 2015 issue of Business Airport International).

The benefits of standardization
Business aviation is still hugely fragmented, so the efficiency and standardization created by FBO brand mergers is generally good news, both for customers and for business.

Currently FBOs offer quite a varied service, so Signature’s dominance in the business aviation market (especially in the USA) will go a long way to setting the standard for other FBOs to follow, just as the IS-BAH (International Standard for Business Aircraft Handling) accreditation is already doing.

But there will be some industry concerns that this dominance could lead to a monopoly, especially in the USA, where the FBO usually dictates the fuel price paid by aircraft operators (in Europe aircraft operators usually have more flexibility on where to buy their fuel, but there are exceptions, including London Farnborough and London City airports).

Is the customer aware or interested in FBO brands?
FBOs have to please three customers – the aircraft operator, the crew and the passengers. And in the past, it’s been the perception in the industry to think that the passengers do not really mind which FBO brand they use when they have a choice of more than one at their chosen airport, which is the case at most major private jet airports.

But we have seen a shift in recent years. Today’s private jet customer expects more choice and transparency than ever before and that increasingly includes their choice of FBO.

While it is still the aircraft operator who chooses which FBO to use most of the time, at PrivateFly we are seeing an increasing number of passengers asking for a specific FBO when they travel.

Some of our clients only ever want to use a certain FBO, be it because they like to be able to drive up to the aircraft or simply because they enjoy being known and the extra-personalized service level that brings. But we do see newer customers having a preference for the bigger chains, and if they are using an unknown airport, they may like to opt for the comfort and security of using, say, a Signature FBO, rather than a small independent company.

Can smaller FBOs compete with the big brands?
Many smaller FBOs do a fantastic job. Some are family businesses with staff that truly go the extra mile to give operators, crew and passengers the best possible service. For instance, the family-run Inflite Jet Centre at London Stansted was recently announced as the first UK FBO to earn an IS-BAH accreditation, so it is leading the way in terms of best practice.

But as new private jet customers continue to enter the market, and our industry continues to mature and consolidate, smaller FBOs will have to fight hard to win their share from the big – and growing – brands.

 

About the author
Adam Twidell is PrivateFly’s CEO and co-founder. After 10 years as a RAF pilot and then flying private jets himself, Adam saw the opportunity to use technology to transform the fragmented private jet market. Image courtesy of PrivateFly.
 

 

 

 

October 15, 2015

 

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