Another major business aviation consolidation is on the cards, following recent news that BBA Aviation plc – owners of Signature Flight Support – are proposing to buy rival Landmark Aviation, in a $2.065 billion deal.
With Signature and Landmark two of the world’s three biggest chains of FBOs (private jet handling and terminal services), the deal would make the combined group the world market leader by quite some distance.
‘Exciting long term growth’
BBA Aviation’s chief executive Simon Pryce said it’s all about timing: “This is the right time to buy this asset, it’s the right price and we know the business very well”. And he talked of the exciting long term growth potential for business aviation, following the downturn.
This is one of the biggest industry consolidations we’ve seen for some time – and follows other recent mergers in various subsectors of our industry – from manufacturers, to airports, to aircraft operators. See previous post 2015 set to be a bumper year for bizav mergers.
The benefits of standardisation
We’re still a hugely fragmented industry, so the efficiency and standardisation created by mergers is generally good news, for customers, and for business.
FBOs can offer a varied service. So in that sense, Signature’s dominance (especially in the US) will go a long way to setting the standard for other FBOs to follow. Just as the recent IS-BAH accreditation is already doing (see more about the IS-BAH).
But there will be some industry concerns that this dominance could lead to a monopoly. Especially in the US, where the FBO usually dictates the fuel price paid by aircraft operators (in Europe aircraft operators usually have more flexibility on where to buy their fuel, but there are exceptions, including London Farnborough and London City).
The increasing ‘brand factor’ in FBOs
It will also be interesting to see how Signature’s growth will impact the already-growing ‘brand factor’ in FBOs. While it often the aircraft operator who chooses which FBO to use (there is usually a choice, at bigger private jet airports), we are seeing more and more clients asking for a specific FBO when they travel.
Some of our clients only ever want to use a certain one, and some have a preference for the bigger chains – particularly newer customers. If Signature and Landmark do become one, smaller FBOs (many of which offer a fantastic service) will need to fight even harder to make themselves visible.
Our Flight Team can advise you the FBO choice at any global airport. Contact us or call +44 1747 642 777 (24 hours).