CSOBeech

You know you are getting ripped off if fuel prices are at $8.45. Do these people at Teterboro really want to sell fuel, or are New York area pilots just insensitive to prices?

Lowest price in the U.S.:

Louisiana 3F3 $3.29

Highest prices in the U.S.:

TEB First Aviation Services, Inc. $7.82
TEB Atlantic Aviation $8.41
TEB KTEB Signature Flight Support $8.45

Accept the fact that in any business gross profit dollars is the most important measuring stick...dollars pay overhead and, hopefully, are greater than expenses and, if so, yield a profit.

For a long, long, time I have held off about venting on 100LL fuel margins. I spent about 25 years in the wholesale/retail fuel business with 65,000,000 gallons annual volume in my last venture many years ago. I learned the business. I learned how to manage price for the best price/volume ratio for maximum profit.

I guess I'll post on avgas now. In the "old days" profit margin was on a cents per gallon basis. On that basis if one paid $.30 for fuel he was happy with a $.10/gallon profit and sold fuel for $.40. When fuel cost went to $.40 the same person was happy with a selling price of $.50, still a dime per gallon profit.

Later, fuel was sold like other retail products, on a margin % of the selling price. If cost was $.75 and selling price was $1.00 the profit margin was 25%.

Thirty years went by and aviation fuel costs rose gradually until the cost of a tanker load, with taxes, was about $1.75 per gallon. Business graduates with profit "margin", instead of cents per gallon, became the norm. However, a lot of these business school educated airport managers/FBO's were still happy with a cents per gallon that yielded a 25% margin and, subsequently, they sold fuel for about $2.35 per gallon. Many sold it for $1.99, happy to make $.24 per gallon while selling a good volume of fuel.

Radical changes occurred in the mid-2,000 era. Fuel prices went up/down by a dollar or two in less than a year. FBO's made a killing at times, and realized a profit margin of 40~50% for a year or so. Since that time many of these people have not relinquished their margin %, and for a long time their volume has not suffered because uneducated to the fuel business /well-heeled pilots/owners have just "paid the price". Let's hope the high priced FBO's volumes shrink until they feel compelled to lower price to achieve a more balanced volume:profit margin ratio, and more reasonable prices.

Most of the airports in the U.S., during the radical fuel price fluctuations, got comfortable with making $1~$2 per gallon and they don't want to give it up, even now, several years later. The result is very high prices that yield a cents per gallon profit of $2 or more and a margin of 40% to 60%.

What do I think is a fair price for avgas? I still think on a cents per gallon basis, and feel that $.50/gallon is a good and reasonable profit that will yield volume and sufficient gross profit dollars. In today's market that equates to approximately $3.99 selling price. However, all, or most, FBO's don't think as I do, and price their fuel with a higher margin/mark-up, so, I fly to those places with less expensive fuel. Yesterday I flew to Middlesboro, KY, and filled my tanks with fuel at a price of $3.85. I was going to burn some fuel anyway, with a fun flight, and when I put almost 60 gallons of fuel in my plane I saved almost $50 over my home base airport's fuel price. Song: "When will they every learn, when will....".

I wish I lived closer to 3F3, the least expensive airport for fuel today.

What can we do to keep fuel costs at a reasonable level? Don't patronize those with higher prices. Encourage your friends to do the same. Plan trips, long and short ones, with a stop at an airport with more reasonable pricing. It's simple, if there are no sales the price will be lowered (What is the alternative? Quit? Lower price?).