For some FBOs, the cost of remaining closed for the days (in some cases weeks) after September 11 has been catastrophic. In a low-margin business such as an FBO, especially an independent facility, cash flow is the lifeblood of the business. Cut off the flow for too long, and the patient cannot survive, no matter what measures are taken after the fact. The bulk of the cost of complying with new FAA-mandated security measures may not fall directly on the necks of FBOs, but down the road, observers say, it’s a safe bet they will absorb some of the fiscal pain associated with upgrading an airport’s security infrastructure.
One glimmer of light for even the most beleaguered FBOs has been the fact that crude oil prices have actually decreased in the weeks since the attacks. Ironically, the decrease has been attributed to lack of airline travel and the resulting surplus of crude. With crude prices down, the wholesale price of jet-A takes a corresponding dip, though not usually as precipitous as the drop in prices for auto fuel, which is manufactured in much greater quantities and not stockpiled as is aviation fuel. Over the past several years, FBOs have learned to insulate their retail fuel prices with enough padding that they can survive regular increases in wholesale prices. All that means is that prices are less volatile than those of auto fuel. When wholesale prices go down, there’s a bit of extra profit for the FBO to help weather the next storm of higher prices from the refinery.
