Pilot, Flying J Merger Ruffles Feathers

OGDEN, Utah -- While the financial performance of the merged Pilot Flying J entity appears to be a hit, customers are claiming stations are suffering from declining services and higher prices since the combination became official, Trucker.com reported.

The company's fuel business improved, thanks to higher gross profit, increased margins and a slight boost in gallons sold. Pilot also increased street prices on all Flying J locations between six and eight cents per gallon, which will result in at least $100 million of additional profit, according to the report. Increased traffic, meanwhile, also hiked non-fuel profits.

On the foodservice side, a deal with Denny's Corp. will result in a $250,000 investment at each location, for a total of roughly $35 million to $40 million, along with $200,000 to $300,000 in upgrades on each location. In addition, Denny's will pay rent of 7 percent to 8 percent of sales. Overall, the arrangement is expected to improve Pilot Flying J's cash flow by $15 million per year, the report stated.

But not everyone is pleased with the results. Owner operators are upset about the higher street prices, while customers are concerned about the higher fees for such services as check cashing and showers, the new foodservice arrangements, and the lower level of personalized service as the Flying J locations are "Pilotized," according to the report.

Trucking companies are also concerned about higher diesel fuel prices given Pilot Flying J's market dominance, the Web site reported.

Meanwhile, independent operators and smaller chains -- among them AMBEST, North American Truck Stop Network, Professional Transportation Partners, and TravelCenters of America -- feel threatened by Pilot Flying J, and have expressed concerns to the Federal Trade Commission.

These operators are concerned that Pilot Flying J -- which now controls more than 50 percent of the diesel fuel market for long haul interstate trucking companies -- will use its dominance to increase its market share. In addition, some independent locations using the merged company's Fuel Island Leasing Program claim Pilot Flying J is charging higher fuel card fees compared to company-owned locations.