When Macquarie Infrastructure completes its planned $338 million acquisition of the Trajen FBO chain in the third quarter, the aviation industry will have three dominant players. Macquarie owns Atlantic Aviation and will merge the 21 (possibly 23 by the time the deal concludes) Trajen bases with the 19 Atlantic Aviation FBOs that it already owns. Thus Atlantic Aviation (40 to 42 bases) will join Landmark Aviation (35) and Signature Flight Support (81) in the FBO Big Three.

The Atlantic and Trajen FBOs are complementary, with no overlapping facilities. “Our objective is to broaden our bases to provide services to our customers,” said Lou Pepper, Atlantic Aviation CEO. “This expands our footprint and brings in new dynamic locations.” No details are yet available about how Pepper plans to integrate the two companies. “We’re not going to rush it,” he said.

While Pepper declined to comment about whether FBO consolidation into three large chains will cause prices to FBO customers to rise, he is optimistic about business aviation. “We’re very bullish on the industry,” he said.

Asked what he thought about the growth of Atlantic Aviation, Shawn Vick, president of Landmark Aviation, said, “There will always be competitive pressure in the marketplace. The market is always efficient and major players are only part
of the overall environment.”

The Macquarie purchase of Trajen, he added, “is not a surprise. It’s part of a natural evolution within our industry.” As for the competitive effect on Landmark Aviation, he said, “We don’t view it as a competitive threat. We’re making business decisions in alignment with our strategy, as a provider of a full menu of services. We do not get concerned about what the rest of the market is doing.” (Landmark Aviation is owned by The Carlyle Group.)

Steve Townes, founder of aerospace investment firm Ranger Aerospace, said there is room for more consolidation in the FBO industry. (Ranger bought Keystone Helicopter in January 2002 and sold it to Sikorsky Aircraft last year.)

Townes sees the FBO consolidations as analogous to the two biggest car rental firms: Avis famously marketed itself as a strong number two to Hertz’s dominance of the industry. As Townes put it, “The Atlantic-Trajen [alliance is] the Avis to the Hertz/Signature. My personal opinion? Number two [Atlantic-Trajen] is rising like a strong bullet.”

Consolidation will continue, he explained. “I predict that Macquarie is not done investing in that sector. It’ll be an interesting strategic horse race to see what happens now between the multibillion-dollar powers of The Carlyle Group, Macquarie and BBA as they try to figure out their next moves.”

Leadership is key, said Townes, who has no financial interest in Macquarie, Atlantic Aviation or Trajen. He believes that Atlantic’s Pepper is “the ideal person to lead this integration and to guide that company forward to strategic success. Lou Pepper is arguably the very best senior executive leader in that whole sector.”