For the FBO business, 2013 may go down as the year the industry truly began its slow, tentative climb out of the trough. U.S. business jet activity, both domestic and international, rose over 2012, which in turn saw a modest gain over 2011. At almost 3.4 million operations, domestic activity last year increased by 2.4 percent, according to the FAA, an improvement of more than 79,000 operations but still 19 percent lower than the record high of 4,191,692 operations set in 2005. International operations last year reached record levels at 677,822, an increase of nearly 2 percent over the previous year.

In its annual review of business aircraft activity, industry data provider Argus indicated that Part 135 flight activity alone rose 11.3 percent last year, with an increase in each month year-over-year. The company noted gains in flight activity by large-, medium- and small-cabin private jets of 5.5 percent, 2 percent and 3.1 percent, respectively.

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Understandably, those increases in operations have translated to improvement for some in the FBO industry. “Business last year was considerably better than in 2012,” said Lou Pepper, president and CEO of Atlantic Aviation, which operates 63 locations in the U.S. (with the addition of six more expected this month). “I wouldn’t call it a breakout year, but I would call it continued momentum.”

That momentum has also turned up the heat on what had already been a simmering consolidation market. “It’s fueled it quite nicely,” Pepper told AIN. “It has given the consolidation market a shot in the arm because a lot of owners were waiting for an uptick so they could see their values firm back up again. We’re headed toward where sellers are coming out of the woodwork again, and quite honestly there are sellers everywhere,” he said, adding he expects the trend to be robust all this year.

While last year started out slowly, the FBO industry gained steam with each passing month. “In 2013 we still saw spikes, both ways in the early months,” noted Landmark Aviation president and CEO Dan Bucaro. “You got a good month and then you had a bad month, you had a good week and a bad week, so the only thing I would say is that the latter half of 2013 and the beginning of 2014 have been more stable.”

A forecast by FBO industry consultants Aviation Business Strategies Group (ABSG) predicts fuel sales for this year will remain relatively static. In a report released at this year’s NBAA Schedulers and Dispatchers annual conference in January, company principal John Enticknap said the results of his company’s annual FBO industry survey indicate the entire market has yet to catch traction. “Although there is increased optimism this year, nearly half the FBOs surveyed did not see an increase in business during 2013,” he said. Last year, the company predicted that any provider that achieved a 6-percent or better increase in fuel sales would be among the top industry performers, yet more than 20 percent of those surveyed this year reached or surpassed that target in 2013. “For 2014, we’re raising this high-water mark to 8 percent and nearly 10 percent of those surveyed indicated they expect to surpass this mark.”

Those potential gains depend on the absence of negative outside influences. “There is still some fragility,” Pepper told AIN. “It doesn’t take a lot; any sort of disruption in the financial markets or geopolitically could hurt some of our momentum.”

Customer service remains the most important factor our survey respondents listed in choosing an FBO, while the value of passenger amenities gained 3 percent in importance over the previous year. However, changing profit structures in the FBO industry might compel some to make changes, according to Enticknap. “On one end, FBOs are faced with higher cost of fuel, which drives up the base price. At the other end is the more savvy aircraft operator trying to drive down the posted price,” he said. “Caught in the middle is the FBO margin, which is being squeezed like a lemon in a juice press.”

To counter this, ABSG has noted a trend in which FBOs are considering charging customers on an à la carte pricing model for items that are traditionally provided free. Customers have come to expect such “freebies” as newspapers, ice and coffee, but those amenities do add up for the FBO. Throw in other costs, such as insurance, which could run as high as $1,000 a day for some locations, said Enticknap, and it becomes imperative for FBOs to seek revenues from sources other than fuel.

While this model has existed successfully outside North America, notably in locations where FBOs do not have any control over aircraft fueling beyond possibly scheduling the arrival of the tanker truck, Enticknap said any U.S. FBO that implements such pricing should expect backlash from customers. “In the U.S. there is much reluctance to unbundle services, because no FBO wants to be the first,” he said. Indeed, more than a quarter of the respondents in this year’s survey listed à la carte pricing as grounds to avoid an FBO.