AvGas & MoGas Coop, Buying Direct Spot Market/Wholesale

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sdpilot

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kyle
So I was wondering if anyone has ever tried to form a coop and buy large quantities of 100ll or mogas directly from a refinery or on the spot market. My guess is the FBO markup is huge and if you could setup a cooperative that with 100 pilots or so at a local airport the savings would be substantial.

When I tried to google spot market 100ll/avgas/mogas I couldn't find anything. My guess is at my local airport we could easily get a coop that would burn at a minimum of 500 gallons a day. If the savings was 1$ that would be 500 a day or 15,000 a month.
 
sdpilot said:
So I was wondering if anyone has ever tried to form a coop and buy large quantities of 100ll or mogas directly from a refinery or on the spot market. My guess is the FBO markup is huge and if you could setup a cooperative that with 100 pilots or so at a local airport the savings would be substantial.

When I tried to google spot market 100ll/avgas/mogas I couldn't find anything. My guess is at my local airport we could easily get a coop that would burn at a minimum of 500 gallons a day. If the savings was 1$ that would be 500 a day or 15,000 a month.
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Since either the FBO or the City makes money off that markup it'd be rather difficult to do.
 
jesse said:
Since either the FBO or the City makes money off that markup it'd be rather difficult to do.
Click to expand...

I'm talking about a cooperative FBO in which it does not operate for profit. This would be a completely different business model than what exists today.

Think of it in terms of REI or similar where you have a group of members that join together to get the same services and discounts a for profit FBO offers but instead does not operate for a profit. Those services would be offered at cost+overhead to it's members.

I think GA would benefit largely from a cooperative FBO model.
 
sdpilot said:
I'm talking about a cooperative FBO in which it does not operate for profit. This would be a completely different business model than what exists today.

Think of it in terms of REI or similar where you have a group of members that join together to get the same services and discounts a for profit FBO offers but instead does not operate for a profit. Those services would be offered at cost+overhead to it's members.

I think GA would benefit largely from a cooperative FBO model.
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I didn't think any FBO made a profit these days anyhow :D

Just messing with you. Could be an idea worth exploring. Probably be some political challenges.
 
If it is a government operated airport the instant they realize you want to take money out of their hands, the board/council will pass new rules putting your operation off the field.
At our county owned field they get a percentage of the gross from any commercial operation occurring on the field and you have have them as named insured on your liability policy for a minimum of ten million.
You expect them to let you install a private fuel farm on public property? (insert explosive, pants wetting laughter here)
Where are you going to get the commercial liability insurance for the fuel operation? (insurers are not fond of flammables)
Where are you going to get the up front money for the tanks and equipment?
And if you are thinking of a fuel truck, the employees to man it 24/7?
And the work comp insurance?
And the ramp space?
And the business office?

And if you do manage to pull it off you will discover why they have to mark the fuel up so far.

But other than that, go for it.
 
Rather then starting from scratch perhaps you can form a group buy from the existing fuel supplier. There is a flight school at my home airport that pays less then pump prices because they have a agreement with the FBO. I don't know if they commit to a certain amount of purchase per month or not but that might be a better option for you.
 
sdpilot said:
I'm talking about a cooperative FBO in which it does not operate for profit. This would be a completely different business model than what exists today.

Think of it in terms of REI or similar where you have a group of members that join together to get the same services and discounts a for profit FBO offers but instead does not operate for a profit. Those services would be offered at cost+overhead to it's members.

I think GA would benefit largely from a cooperative FBO model.
Click to expand...



Discounts are REI? That's the most expensive outdoor store I've ever shopped at. I think that all the red tape to do this would be too much for most people to think seriously about this.
 
The typical FBO markup is $1-2/gallon. This is how they pay their bills. Typically they price landing fees such that you can buy fuel and pay the landing fee in fuel costs, or pay it directly.

If you wanted to form a co-op, I'd guess your best bet would be to buy a fuel truck and pay the supplier to fill it. I don't know how that'd go over, but it'd be the easiet. Then your only infrastructure is the truck.

Be prepared for resistance from the other FBOs on field - you'll be taking business away from them, and if you're talking about 500 gallons a day worth, that will not make them happy.

It's a good idea. At my last airport, I would have been all for it. Crappy management and high markups. Really would have loved to see them go out of business. At my current airport where I like the management and have a good relationship with them, I'll pay the extra cost because I want them to do well, and the fuel is already cheapest in the area. It's worth keeping this in mind as you consider your options.
 
jtheune said:
Rather then starting from scratch perhaps you can form a group buy from the existing fuel supplier. There is a flight school at my home airport that pays less then pump prices because they have a agreement with the FBO. I don't know if they commit to a certain amount of purchase per month or not but that might be a better option for you.
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Definitely easier. Discounts can be rather significant, depending on the FBO.

At my last airport, base customers got 20 cents off. Cloud Nine got 40 cents off. Given their high markup, that was pretty stingy.

Meanwhile, Signature at KPBI gave Cloud Nine $2 off, bring the price to well below any other FBO in the area.
 
Everybody on the other side of the equation (airport authorities, FBO's) knows that fuel sales are the key to survival and that the barriers to entry by interlopers must be high, tight and secure.

You can therefore assume that any such notion is DOA and doubly so in CA.
 
I've thought about this model for a long time. just never found the time to try it. Our dispenser is setup for private-card access, so you can still run retail rates, and your co-op participants can get the truck rate with their card (if desired)

Our station is for sale currently, and listed in TAP for 69k. Also have a 750-gal DTS refueller available.

We get price updates on Tuesdays. Last week's was:


Product 100LL Aviation Gasoline Quantity 4000 Gallons
Terminal Ascent Rail CA Bakersfield Effective Tuesday, October 23, 2012

100LL Aviation Gasoline $ 4.73705/gal
Airport Flow Fee 0.04000/gal
Federal Excise Tax 0.193000/gal
Federal LUST 0.001000/gal
Federal Oil Spill Tax 0.001900/gal
CA State Excise Tax 0.180000/gal
Total $ 5.15295/gal
Previous Quote on 10/16/12 $ 5.66980/gal


Product Jet-A Quantity 7000 Gallons
Terminal Chevron CA El Segundo Effective Tuesday, October 23, 2012

Jet-A $ 3.38251/gal
Airport Flow Fee 0.04000/gal
Federal Excise Tax 0.243000/gal
Federal LUST 0.001000/gal
Federal Oil Spill Tax 0.001900/gal
CA Sales Tax 0.180000/gal
Total $ 3.84841/gal
Previous Quote on 10/16/12 $ 3.91879/gal
 
sdpilot said:
So I was wondering if anyone has ever tried to form a coop and buy large quantities of 100ll or mogas directly from a refinery or on the spot market. My guess is the FBO markup is huge and if you could setup a cooperative that with 100 pilots or so at a local airport the savings would be substantial.

When I tried to google spot market 100ll/avgas/mogas I couldn't find anything. My guess is at my local airport we could easily get a coop that would burn at a minimum of 500 gallons a day. If the savings was 1$ that would be 500 a day or 15,000 a month.
Click to expand...

Co-op's are usually a member based organization. Sales to the general public don't happen. If it is structured as a member only bought / sold commodity then govenment oversight is not going to be a big issue. Same with dispensing to other members,,,, you teach them how to run the fuel truck to fill their planes.. Like Ted said too,, your only infastructure is the truck itself.. The FBO / FBO's will scream like a stuck pig though. IMHO.
 
Looks like a couple of politicians in California just "urged" FAA to "get directly involved" in making sure MoGas is available on airports in California.

:popcorn:
 
I don't agree the fbo markup is huge. I buy 1000gal at a time to keep at the farm and I typically get it $0.80-0.90 under what the surrounding airports sell for. Then they have to pay sales tax, flowage fees, credit card fees, employees, insurance. Maybe they're getting a better price than my small loads. If not, I don't know how they stay inbusiness.
 
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Most airport authorities already have language banning storage of fuel and anything related to the pumping of fuel that isnt the FBOs .
 
Just because you want to be a coop non-profit doesn't mean that you will be exempt from your fields minimum standards. Expect to be required to have a giant insurance policy, a physical building, an employee during the required hours, up to date equipment, fuel testing procedures etc. Don't forget the liability you'll have if there is an accident caused by fuel issues such as dirty fuel, water in the fuel, bad fuel etc..

In most places, the FBO doesn't turn much of a profit on 100LL and can be losing money if it's an RV taking 8 gallons at a time. It's the cost of doing business. I'd be willing to bet that the markup on 100LL is between about $1.00-$1.50/gallon depending on where it is. This is for full service BTW, I'd guess self is around $.50-$1.00. FBOs are certainly not in the business of "printing money"
 
taters said:
Most airport authorities already have language banning storage of fuel and anything related to the pumping of fuel that isn't the FBOs .
Click to expand...


I would plan on having minimal infrastructure, providing mogas & 100LL. I've already found a supplier that supply mogas and supply the necessary infrastructure. The FAA is supportive and the airport can't do much unless they want to lose FAA funding. Of course FBO's wont like it, but they are free to compete against me. Do FBOs currently like the other FBO next door that sells gas cheaper?

I'd gladly pay a $10-20/month member fee to have available mogas for my Lycoming and 100ll at $1 cheaper per gallon and mogas at $2 cheaper. If I can't have automated pumping stations then the member fee or access fee of $10 a month will pay for an employee to pump gas during normal business hours. The entire idea is dependent on having enough members to cover fixed costs like insurance, infrastructure rental, etc... With 100-200 members this is very doable for a private organization that is not open to the general public.

I'm not going to explain the entire legal structure on the forum, but was more interested in gauging interest as well as knowing if anyone was aware of sport pricing information. I've found pricing information so I've answered my own initial question already.

Are you all saying that I couldn't start my own FBO that is non profit and sells gas? Seems like an antitrust lawsuit to me if that is the case. Actually I know this is the case and the airport doesn't care what FBO operates as long as they get their money, and if they end up getting more money because more people use the airport and buy gas there the airport is going to be very happy. Other FBOs very well may not.

My plan going forward is to work with the airport for some small space with automated filling stations as another poster mentioned and about 2000 gallons a month of both mogas and 100ll. I may even have an existing FBO that is willing to partner, but I'm not depending on that. As pilots we are in control so if enough group together and start something to reduce the cost of flying others will follow.

If my FBO provided Mogas and more reasonable prices not only .20 off per gallon on purchasesw over 50 gallons I wouldn't even consider it, but there is a market and I figure why not fill the need of the market if it exists. Problem is the FBOs don't consider Mogas profitable enough so they don't sell it.

Again I'm not trying to make money here just provide a way of obtaining cheaper fuel prices for GA.
 
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One idea for you...

Rather than doing in-ground pumps (expensive and lots of legal issues), buy a used fuel truck or two. Will save you a bunch of money and then allow members to drive the truck to their planes. Make a requirement that members be "checked out" to do so.
 
Ted DuPuis said:
One idea for you...

Rather than doing in-ground pumps (expensive and lots of legal issues), buy a used fuel truck or two. Will save you a bunch of money and then allow members to drive the truck to their planes. Make a requirement that members be "checked out" to do so.
Click to expand...

I don't plan on doing in ground pumps, but driving the fuel truck is also not an option (huge insurance and legal liability there). There will be a place where you can taxi up and fuel up or an employee will operate a fuel truck.

Believe it or not there is actually government funding for this kind of thing
 
schmookeeg said:
We get price updates on Tuesdays. Last week's was:


Product 100LL Aviation Gasoline Quantity 4000 Gallons
Terminal Ascent Rail CA Bakersfield Effective Tuesday, October 23, 2012

100LL Aviation Gasoline $ 4.73705/gal
Airport Flow Fee 0.04000/gal
Federal Excise Tax 0.193000/gal
Federal LUST 0.001000/gal
Federal Oil Spill Tax 0.001900/gal
CA State Excise Tax 0.180000/gal
Total $ 5.15295/gal
Previous Quote on 10/16/12 $ 5.66980/gal
Click to expand...

Wow, we pay $5.29 for our 100ll out the door here in small airport Oklahoma. Makes me feel a little better about paying it.
 
What says the gathered crowd regarding Grant Assurance 22f?

"Grant Assurance 22(f), Economic Nondiscrimination, provides that a sponsor "will not exercise or grant any right or privilege which operates to prevent any person, firm, or corporation operating aircraft on the airport from performing any services on its own aircraft with its own employees (including, but not limited to, maintenance, repair, and fueling) that it may choose to perform."

And a kicker...

"11.8. Activities Not Classified as Self-service.
Activities not classified as self-service include servicing aircraft and parts for others, providing parts and supplies to others, receiving services and supplies from fuel cooperative organizations (CO-OPs), and delivery of fuel to owners or operators by off-airport suppliers."

Then the odd side-bar...

"b. Fuel Cooperative Organizations (CO-OPs). An airport sponsor is not required to permit a CO-OP to self-service. If a sponsor does permit CO-OPs to self-service, the CO-OP will have to observe the same minimum standards and rules and regulations applicable to all self-service activities. In addition, if self-fueling is allowed for CO-OPs, the sponsor may require the CO-OP to demonstrate joint ownership of the fuel tank and the fuel. The sponsor may also require the CO-OP to document that all personnel involved in fueling operations are adequately trained and that self-fueling is conducted only for that CO-OP business partner for which the employee actually works."

There is more, this is all copied from 5190.6B if you need a little reading for insomnia.

http://www.faa.gov/airports/resources/publications/orders/compliance_5190_6/

Clear as mud. :)
 
Many airport sponsors erect barriers in the way of creative options such as that proposed by the OP; but not all; and after all, what's a bureaucracy other than something to be endured and overcome?

Seems to me like our San Diego friend has a pretty good idea what he's getting into, and is proceeding in a deliberative and proper way; to him, I say: Good Luck!

I'll look forward to reading about your successful operation - and, no, I am NOT kidding.
 
schmookeeg said:
We get price updates on Tuesdays. Last week's was:


Product 100LL Aviation Gasoline Quantity 4000 Gallons
Terminal Ascent Rail CA Bakersfield Effective Tuesday, October 23, 2012

100LL Aviation Gasoline $ 4.73705/gal
Airport Flow Fee 0.04000/gal
Federal Excise Tax 0.193000/gal
Federal LUST 0.001000/gal
Federal Oil Spill Tax 0.001900/gal
CA State Excise Tax 0.180000/gal
Total $ 5.15295/gal
Previous Quote on 10/16/12 $ 5.66980/gal


Product Jet-A Quantity 7000 Gallons
Terminal Chevron CA El Segundo Effective Tuesday, October 23, 2012

Jet-A $ 3.38251/gal
Airport Flow Fee 0.04000/gal
Federal Excise Tax 0.243000/gal
Federal LUST 0.001000/gal
Federal Oil Spill Tax 0.001900/gal
CA Sales Tax 0.180000/gal
Total $ 3.84841/gal
Previous Quote on 10/16/12 $ 3.91879/gal
Click to expand...

How does it work with the trucking, do you pay for that on a per-mile basis from the terminal ?
 
Oh, btw. We have a local co-op pump. It is a closed corporation, if you want a share, you have to wait for someone to die :( According to one of the shareholders, there is a monthly fee that covers the insurance and the annual maintenance contract, the fuel price per gallon is whatever it cost to put the stuff in the tank + the airport flowage fee.

There are also a number of private tanks and trailers. You have to adhere to the same rules as the FBO (no fueling inside hangars, park the trailer 50ft from the next building etc.), but beyond that FAA rules preclude the airport from restricting those 'self fueling operations'. If they require you to have a firetruck on standby, they have to require the same from the FBO or the airlines.
 
weilke said:
How does it work with the trucking, do you pay for that on a per-mile basis from the terminal ?
Click to expand...

Yes. It's typically per-mile and per load/gallon. Some loads are 7000 gallons or smaller (no pup) and in some states you can have a pup to bring it up to 10,000.
 
SCCutler said:
I'll look forward to reading about your successful operation - and, no, I am NOT kidding.
Click to expand...

It will probably be about a year before things get going maybe 6 months but that is a bit aggressive. I'll probably keep it small and see how it goes seeing I'm paying for this out of my own pocket to get it going, assuming I can get it going.
 
weilke said:
How does it work with the trucking, do you pay for that on a per-mile basis from the terminal ?
Click to expand...

Those price quotes included trucking, although I suspect it varies by supplier. Taking an 8000 gallon load of avgas drops the price 3c/gal to reflect this.
 
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