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Grappling With High Fuel Prices
When Fuel Costs Spike, Everyone In General Aviation Is Impacted
There’s no question that fuel costs adversely impact organizations and small businesses using general aviation.
Historically, the general aviation community has paid nearly twice the price for fuel than that paid by the commercial airlines. The impact of continuing price increases on the industry is visible in all parts of the country, and businesspeople are struggling to grapple with the situation.
General Aviation Fuel Sales Drop Significantly
Reports from major fuel providers and charter companies have shown that when fuel prices spike, consumption and use are decline significantly. A survey of operators from across the country has found that when fuel costs dramatically go up:
- Purchase of Jet-A fuel falls by 10% to 20%.
- Purchase of AvGas drops by 30% to 40%.
General Aviation Activity Declines, Behaviors Change
High fuel costs change operational behaviors. The Federal Aviation Administration (FAA) has reported that activity at general aviation airports declines significantly because of fuel costs, and as an example has cited operations at Springfield, IL, which have declined as much as 30% in the face of high fuel costs.
An aviation consulting group conducted a recent informal survey of fixed base operators (FBOs) at general aviation airports. It found that the vast majority (98%) of those who continue to fly cite rising fuel costs as a concern, and take measures to minimize consumption. Among those surveyed:
- 28% request more direct routings;
- 15% have started tankering fuel;
- 40% reported flying at slower speeds to save fuel;
- 19% have cut back on hours flown, and;
- 76% reported customers switching FBOs to find lower-priced fuel.
UBS Investment Research analysts recently calculated that business jet flight activity - takeoffs and landings - was down 11% globally because of fuel costs. The analysts also estimated that, largely for the same reason, business jets manufactured by Dassault and Bombardier have seen 10% declines in flight activity through the first seven months of 2008, with Hawker Beechcraft down 7%, Cessna 5% and Gulfstream 2%.
Impact Is Felt Across the Board
Eighty-five percent of the companies that utilize business aviation in the United States are small and mid-size businesses, representing many different types of industries. There’s no question that, when fuel costs rise, the impact is felt in all corners of the nation’s economy.
- A top-tier fractional provider earlier this year announced layoffs due to fuel costs and reduced flying.
- FBOs on average now participate at about four fuel card or fuel discount programs to save money for their own flight operations and those of their aviation customers.
- The challenges prompted by soaring fuel costs aren’t limited to the marketplace. Philanthropic organizations that rely on general aviation aircraft are straining under the weight of increased fuel costs.
The bottom line: The people in general aviation, including business aviation, are subject to the sluggish economy and high fuel costs just like everyone else.