The recent debate around government intervention in FBO fees has been well documented. In this article, Ries Vriend, CEO of Amsterdam Software, the developers of Bangor International’s FBO One, the fully integrated and intuitive on-line aircraft handling and fuel management program, argues against further interference in this area.
Some regard airports as public utilities, as open market businesses by others. As the founder and owner of a business that delivers ground handling, pricing and billing software for airports and FBOs around the globe, my team services customers such as BGR in the USA, and has a strong presence in the Middle East, Europe, Africa, Australia and the Far East. Our clients process over 300,000 departures through our cloudbased solution FBO One on a yearly basis.
In the past 10 years I have seen a trend to more fees and taxes. NOx emissions charges in Switzerland. Noise surcharges across Europe. And 5% VAT (sales tax) on aircraft fuel introduced in Dubai and Saudi Arabia at the start of this year.
In the US, the application of Federal Excise Tax (FET) on aircraft fuel is an open secret.
This tax is 24 cents per gallon for private jet operations, while commercial airliners pay a few cents only. At an FBO in the US, an operator would be charged the 24 cents as part of the fuel price. They might be able to claim it back from the IRS, in full or in part, based on their status for tax-emption. The NBAA has published a good summary on those conditions online: www.nbaa.org/admin/taxes/federal/fet/2018-federal-excise-taxes-guide.pdf. US Military and the Federal Agencies are categories of operators that are either fully or partially exempt from the tax.
With the introduction of online card payment programs for the military (Air Card), the obligation on FBOs to calculate and specify applicable FET on the captain’s receipt and the final invoice is becoming a necessity in the US.
There are other government fees buried in the fuel price. Environmental taxes are also part of the US fuel price, at less than a cent per gallon for state environment tax and LUST (Oil Spill) combined, and in some states, there is also a state excise tax on aircraft fuel. Most GA airports already impose landing fees, although some FBOs may hide that fact by rolling it up in other charges, such as a generic service fee or the fuel price.
Freedom to move, to look for opportunity and adventure, is at the core of the US spirit. It’s what I love personally when working with clients in the US. And I would argue that maintaining an infrastructure with a low barrier to entry for private air transportation is a great asset for the US. Airfields allow rural and metropolitan areas to be linked, increasing the dynamics of the economy. To maintain the entrepreneurial spirit of America. So why should the government regulate the FBO market too aggressively? The market dynamics and competition are strong as they are.
The complexity regarding fees and taxes is real and growing and the US will see some of that. Governments need to tax users of public services such as airfields, whether through FET or some other fee. Fees are here to stay and likely to get more complex over time. Furthermore, the Internet will drive operators to expect and demand pricing transparency. Similar to other industries, such as hotels and rental cars, online quotes, reservations and detailed electronic invoicing will become the norm in the FBO sector.
This trend ensures that FBOs set up theirpricing and billing systems in a way that provides maximum transparency and accountability. For that, automation is the solution.
Bangor International, with its “no hidden fees” credo, is in excellent shape to service its customers in the Internet age. And with FBO One, operators such as NetJets already book their ground handling services at BGR directly from their in-house trip planning system into FBO One. Detailed electronic invoices are provided to the AvCard aviation payment program, as well as through the US Government Air Card. Meanwhile, Amsterdam Software continues its drive into the future by developing a generic on-line booking and invoice portal, Commsbank, which is scheduled to become available at Bangor in the course of 2018.
It’s always “Day 1”, there are always ways to improve using new technology. On that BGR and Amsterdam Software have built their partnership.