FBO Mergers & Acquisitions - What Next?
Written for Globalair.com & published June 2016:
Not unexpectedly, the subject of FBO mergers and acquisitions was one of the many talking points at this years’ EBACE, the annual European Business Aviation Conference and Expo, held at the end of May in Geneva, Switzerland.
The BBA acquisition of Landmark Aviation at the start of the year and subsequent rebranding as Signature Flight Support took many by surprise. Having divested itself of six Landmark locations, Signature still find themselves with 199 worldwide stations.
EBACE hosted the “Big is Beautiful” consolidation discussion with Mark Johnstone, Managing Director, EMEA region, BBA Signature Flight Support, Laura Pierallini of Studio Pierallini, Patrick Hansen, CEO of Luxaviation Group, Greg Thomas, President and Executive Chairman of PrivatAir and myself representing Global FBO Consult. Moderator was Taunya Renson-Martin. Looking at business aircraft management, the FBO sector and charter operations it became clear quite quickly that there was agreement among the panellists that mergers and acquisitions in the FBO sector will certainly continue for some time. Consolidation in the sector offers advantages of branding, purchasing power and economies of scale. For the smaller FBO chains or independents finding themselves sharing the ramp with a new or rebranded, well-funded competitor, it is not good news and can lead very quickly to a price “race to the bottom”.
And BBA are not the only movers in the FBO market place of late. Just a day ahead of EBACE, Dubai based JetEx announced that is has secured a tender from the Moroccan National Airports Authority to establish five new FBOs, the first such facilities in the North African country. It has already begun business aircraft ground support at Casablanca Mohammed V International Airport, Marrakech Menara and Rabat-Salé, where Swissport was also chosen to provide handling services. At the seasonal destinations of Agadir-Al Massira, and Dakhla, Jetex was named as the exclusive ground services provider. Jet Aviation, a General Dynamics company, seemed to be strongly hinting on their stand at two new locations to come very soon!
Luxaviation Group, new owners of well-established Execujet, Unijet (France), MasterJet (France), Abelag (Belgium), London Executive Aviation (UK), sound very bullish, so we can expect them to keep up the momentum for a while yet.
In the week following EBACE, French company Sky Valet announce it has completed the acquisition of JetBase, Portugal’s leading FBO network. JetBases’ ten FBOs, situated at the main Portuguese airports of Lisbon, Porto, Faro, Cascais and Beja, on the islands of Madeira, Azores and Cape Verde and in central Africa in Mozambique and Angola, will now operate under the commercial name of Sky Valet. This move follows on from the acquisition by Sky Valet in Q2 2015 of Gestair, Spain.
The addition of these new destinations consolidates Sky Valet’s international expansion strategy, which aims to create a network of FBOs located in the most iconic areas. The company already provides ground handling support services at Madrid, Barcelona, Gerona, Valencia, La Coruna, Santiago de Compostela, Palma de Majorca, Ibiza and Malaga airports. Dominique Thillaud, chairman of the management board of Aéroports de la Côte d’Azur (ACA) and Sky Valet, commented, “This acquisition allows us to expand our expertise across a new attractive area of the Iberian peninsula with a reach that even extends to Africa.”
Last April, Florida based Sheltair Aviation announced it had given its FBO network in the Sunshine State a major boost with the purchase the Tampa International Jet Center.
In the same month there were further notable indicators pointing to the continuing trend of aviation fuel suppliers actively expanding their services and branding across the industry, working closely with independent FBOs.
Skylink Services, the lone ground handling service provider for business aircraft at Cyprus’s Larnaca International, became the 52nd Diamond Service member of the World Fuel Services (WFS) Air Elite Network, the international group of FBOs established in 2011 from the remnants of the Avitat network.
WFS and Deer Jet Group expanded their eight-year relationship by signing a memorandum of understanding for the former to provide global aviation support solutions for Deer Jet’s eight FBOs in China and business aircraft handling subsidiary Honor Aviation.
Under the agreement, World Fuel Services will allow Deer Jet FBOs and Honor Aviation to accept its Avcard charge card for payment. More than 30,000 aircraft operators and pilots use Avcard worldwide for aircraft purchases such as fuel, ground handling and maintenance. Avcard is accepted at more than 7,600 locations in more than 190 countries.
If you consider the known facts, talk to key personnel, listen to the rumours, filter out the uninformed comments, you will get a broad sense of how the FBO sector will evolve over the next five to ten years. I believe mergers and acquisitions will be accompanied by co-branding, strategic partnerships and franchising. Realistically the worlds’ capitals and most major cities are fully populated by FBOs, restricting expansion for those not already present in these centres, with many airports restricting the amount of FBO licenses they will issue compounding the problem. Other factors to be considered are the forthcoming sale of a number of airports (France, Germany for instance) and the issuing of new FBO franchise agreements by governments (Morocco just completed, Oman in the process and many more in the pipeline). Right now Africa, Central and South America, India and some of the Pacific Rim countries are getting a lot of attention, maybe it will be from these regions that we will see the next exciting developments emanate!