High Fuel Price Pressures
February 5, 2009
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  • Small Businesses, Farmers, and Local Airports that Rely on Small Aircraft are Feeling the Pressure of High Fuel Prices

    Small businesses, farmers, and charitable organizations that rely on small aircraft are particularly feeling the pinch of sky-rocketing fuel prices, particularly since they cannot buy in bulk like larger businesses and industries.These groups have had to resort to cutting back on airport improvements, passing on higher costs to customers, and scaling back their customer bases to grapple with the increasing burden of rising fuel prices.


    “Complicating matters, the outlook for U.S. auto industry sales continues to deteriorate as fuel prices surge and housing market woes persistÉ..Ford said Thursday it plans to cut its second-quarter North America production by 101,000 vehicles versus the year-ago period, to 710,000 units. The company also reduced its forecast for overall U.S. sales of cars, pickups and commercial trucks to as low as 15.3 million from its previously estimated 16 million.”

    “Ford’s 1Q Strength Difficult To Sustain Over Rest Of Year”

    April 24, 2008

    “Housing construction dropped by 11.9 percent to a seasonally adjusted annual rate of 947,000 units, a much bigger decline than economists had been forecasting. Building permits also fell in March, signaling more problems ahead for the beleaguered housing industry. The continued rise in basic items such as gasoline and food have left Americans feeling squeezed, especially at a time when the weak economy is causing rising job layoffs and an unemployment rate that jumped to 5.1 percent in March.”

    Atlantic Journal-Constitution

    “March consumer prices up due to rising food, fuel costs”

    April 16, 2008

    “15 million dollars. That’s what school officials in Escambia County, Florida, say they could cut from their annual budget. The sluggish economy, including the rising cost of fuel, higher food prices and transportation costs, is affecting the entire school district. Eight million of the proposed 15 million dollar budget reduction could come in the form of teacher cuts.”


    “Teacher Cuts, Staff Layoffs, Schools Closed”

    April 21, 2008

    “The House Small Business Committee’s Investigations and Oversight Subcommittee held a hearing today on how rising gas prices are affecting small businesses. The hearing comes on the heels of this week’s record setting gas prices that have caused anxiety in American families and businesses alikeÉ..Pain at the pump has translated to canceled vacations, higher grocery bills and business lay offs. As small businesses operate on razor-thin margins and rely on competitive pricing to remain viable, passing fuel costs on to customers could result in devastating loss of sales or, in the long term, shutting their doors.

    States News Service

    “Record Gas Prices Bring Hard Times For Small Business”



    John Knight Ð Arkansas Department of Aeronautics, Arkansas

    “Rising fuel costs pose a significant threat to improvements at many airports across Arkansas,” says Arkansas State Aviation Director John Knight. “In Arkansas, 97% of the sales taxes collected on aircraft sales, aviation parts and services, and aviation fuel are granted back to the airports for runway improvements, airport infrastructure, and new airport additions. The result is that some airports may not get the funding they need for basic upkeep. We are even seeing some businesses close aviation departments and sell their planes because they can’t cover their costs, thus putting less money into the State Airport Grant system.” Mr. Knight added, “In the past year, we have seen a loss of $1.5 million dollars to the agency and fewer people purchasing aircraft and fuel. Ultimately, over 90 airports across Arkansas are threatened, and our own Arkansas Department of Aeronautics will feel the pinch since we operate solely from aviation sales taxes collected.”

    Keith Laken Ð President of Illinois-based Lifeline Pilots

    Keith Laken, President of the Peoria, Illinois-based Lifeline Pilots, says: “Over the past three months, fewer volunteer pilots in my organization have been able to fly Lifeline flights because of rising fuel costs. Many of these pilots, who are either self-employed or fly for a small business have had to cut back on their flying, resulting in less flights for patients who need specialty medical care but cannot afford to reach the hospitals and treatment centers. High fuel prices will continue to be a major issue for charitable organizations across the country in the coming months.”

    Dale Patterson, Aerial Applicator Ð Cedar Butte Air Inc, South Dakota

    “In my 22 years in this business, I have never seen such a significant increase in fuel costs,” said Dale Patterson, an aerial applicator from South Dakota. “With constantly shrinking margins in an already difficult economy, there is no way fliers in my profession can absorb such huge hikes. With an approximate 25-30% increase in jet fuel per gallon, we have no choice but to pass the costs onto the customer to save ourselves from going out of business. Our farming customers in the agricultural industry will the feel the pinch as well, harming other consumers down the road. It’s a definite threat and has the ability to cause major problems for the entire industry.”

    Robert Olislagers Ð Centennial Airport, Colorado

    “The fuel cost pinch is apparent at General Aviation airports across the country,” said Robert Olislagers, Executive Director at Centennial Airport in Denver. “We are definitely seeing a drop in fuel sales with AvGas sales most affected by the high cost. Jet fuel sales are also becoming more sluggish with Fixed Base Operators (FBO) contemplating ramp fees for those operators not buying fuel. Of the four FBO’s that operate out of my airport, two have told me that their margins have greatly diminished as they try to absorb the almost daily increases. From my perspective, this is not a sustainable model. Aircraft operators in turn will have to either absorb the cost or pass it on to their customers and there is evidence that some charter customers have stopped flying altogether. The ripple effect undermines everyone, including the communities that depend on them.”

    Rick Ott Ð M.B. Kahn Construction, South Carolina

    “Rising fuel prices have severely threatened my plans to buy a second plane so that we can grow our business geographically and expand their customer base,” said Rick Ott, Sr. Vice President of M.B. Kahn Construction in Columbia, South Carolina. “This is a serious threat to all businesses across the country that use small aircraft Ð if we cannot absorb the costs from the fuel, we can’t serve our customer base or expand our business. Many companies in our field simply cannot afford to pass on a cost increase to customers and as jet fuel prices go up, critical decisions have to be made about how to cover these costs.”