lessons learned from running FBO

FSE and PE make for a powerful combination
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Keith Smith
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Location: Pompton Plains, NJ
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lessons learned from running FBO

Post by Keith Smith »

Post 'em if you've got 'em!

Here's what I've learned so far:
- you can set any retail fuel price you like, but aircraft that are not privately owned (ie, they are owned by the system) pay $4.09 for JETA and $4.59 for 100LL. Only privately-owned aircraft pay the posted price

- you can order bulk fuel and have it delivered to your FBO by the system, but it's expensive (like, only $0.50 less than the system retail price of fuel)

- you can search for airports within a certain distance that sell bulk fuel. When I was comparing against bulk delivery, I happened to pick SAN as my comparison airport (to decide if I'd buy bulk fuel and fly it in myself, or just have it delivered). As it happens, SAN has relatively expensive bulk fuel. Had I checked more airports, I would've found much cheaper bulk fuel. So, to make fuel sales anything close to worthwhile, buy in bulk from an FBO that is priced more aggressively.

- your gate will generate jobs totaling up to 3 pax at any given time. These jobs will be a combination of to/from your airport.
kullery
Posts: 398
Joined: Sat Oct 06, 2012 3:13 am
Location: Medina, OH

Re: lessons learned from running FBO

Post by kullery »

Keith,

Something is not making sense to me on the fuel prices.

KSAN now shows that they are selling bulk fuel at 3.75 for JetA and 4.00 for 100LL PER KG!!!! At those numbers, your COST would have been 10.05 and 10.72 per Gallon!!! And that's before you paid for the Chinook to transport it. I sure hope you didn't pay that.

I purchased bulk at KSDM. By the time I paid for the Chinook to fly it into Emory Ranch (0CA6), I am just about breaking even by matching your retail selling prices. It looks to me like the best deal is to simply place a bulk fuel order and have it delivered.

Let's keep up the price fixing until this fuel is used up!!!
Ken Ullery - PPL-SEL, 1G5
lwilliams
Posts: 206
Joined: Thu Dec 09, 2010 8:32 pm
Location: Guelph, Ontario

Re: lessons learned from running FBO

Post by lwilliams »

Yarrrr...avast ye mateys...Keith be selling fuel.


Yarrrrrrrr!
Lee Williams
wmburns
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Joined: Mon Jun 10, 2013 7:28 am

Re: lessons learned from running FBO

Post by wmburns »

Has anyone heard of the FSE "Heather" report? It's a report put together of the busiest airports in FSE. To get on the list an airport needs 100+ operations for several months in a row. When I last looked 46CA went from 0 operations in December to 89 so far in January. So if 46CA continues it's explosive growth, it will end up on the Heather report. Which means it will be noticed by the FSE community as a whole.

http://www.fseconomy.net/forum/fse-gene ... 2015#77519

To me that other interesting thing is to see the number of planes currently stationed at 46CA. When I first looked, there were no planes available to rent. WOW what a difference.

Regarding running an FBO and buying bulk fuel. IMO you should not sell fuel at a loss. This is one of the items that will allow any FBO to generate a positive cash flow. Why is this important? Because without a positive cash flow it's not possible for an FBO to remain viable long term.

My personal experience with bulk fuel. Recently I needed to fly out a stranded airplane. This required finding bulk fuel for sale (not easy), buying it. Creating the job to move it. And finally paying to have it moved. The transportation cost way exceeded the cost of the fuel. It was comparatively a lot of work for a relatively small amount of fuel. And expensive! So me personally I would rather buy fuel from the FBO operator at time of need. If I have to pay more then so be it. If looking for the cheapest fuel is important to you, then the option is to plan the flight fueling where the fuel is cheapest which isn't a bad idea. This adds to the planning process so that one isn't lugging around excess fuel unnecessarily. Adds to the experience as this is the sort of planning one has to do in real life.

I personally try to avoid airports without ANY fuel. This aversion was bore out by the experience of having to shuttle fuel to a stranded aircraft.
Last edited by wmburns on Tue Feb 10, 2015 12:48 pm, edited 2 times in total.
David Gilbert
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Re: lessons learned from running FBO

Post by David Gilbert »

I would also say that you need pilots to visit your FBO to make it viable. As it cost money in supplies to keep the FBO active if people don't visit the FBO's then they become unviable.
Normal call sign: N8295L or TPX
Keith Smith
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Location: Pompton Plains, NJ
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Re: lessons learned from running FBO

Post by Keith Smith »

Ken,

How cow, I didn't realize the bulk prices were per/KG. I think the guy at KSAN didn't know that either when he set the price.

Believe it or not, when I shopped bulk delivery versus obtaining the fuel myself, I looked at the SAN price and thought it was per gallon. On that basis, it wasn't much better than system delivery, so I went with that for my first order.

Later on, I looked at other places and saw it was "much cheaper", still thinking it was per gallon, and vowed that I would use that next time (as stated in the first post in this thread). But, you're right, Ken, once you convert from KG to gallons, doing it yourself brings it pretty close to the system delivery price.
Peter Grey
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Re: lessons learned from running FBO

Post by Peter Grey »

If it helps to set a price point the fuel at P20, 1L4 (currently enroute), and 49X is priced at a 10% markup to system delivery price for 5000 KG of fuel.

It's set correctly in the per KG bulk fuel and per gallon regular fill up fuel. Note FSE uses a "custom" (read wrong) conversion for KG to gallons of 2.68735 KG to gallon of fuel (for both types).
Peter Grey
PilotEdge Director of Quality Assurance and Operations
peter@pilotedge.net
Keith Smith
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Re: lessons learned from running FBO

Post by Keith Smith »

I just tinkered with some quotes on bulk delivery and finally had the bright idea of getting a quote for a larger amount. If you do the maximum size order of 18,606 gallons, the bulk price per gallon drops quite a bit. So, that's the key...huge bulk orders.

Ok, with all of that now understood...I can see a case where I would drop the price of the fuel quite a bit.
David Gilbert
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Joined: Fri May 02, 2014 6:07 am

Re: lessons learned from running FBO

Post by David Gilbert »

Been doing the math on the cost of running an FBO. A small FBO that has 1 lot on it needs 10kg of supplies per day to stay open. Supplies are around $6 per KG so it costs roughly $60 per day to run an small FBO. You need at least one or two flights in/out of your airfield per day to make a 1 lot FBO sustainable.
Normal call sign: N8295L or TPX
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