Rivals Find Hope in Pilot Flying J's Legal Troubles

KNOXVILLE, Tenn. -- Four years ago, several truck stop operators across the United States objected to Pilot Travel Centers' plan to buy a smaller company, Flying J, to form Pilot Flying J.

At the time, those rivals unsuccessfully asked the Federal Trade Commission (FTC) to block the move. Now, as Knoxville, Tenn.-based Pilot Flying J battles legal woes stemming from fraud allegations around its fuel rebate program, its rivals are hoping the FTC takes a second look at the industry's largest operator, according to a report by The Tennessean.

"I can't touch what they [Pilot Flying J] are giving their customers," said Jan Van Westrop, who operates a travel center named The Tennessean in Cornersville, Tenn. While his business can compete on food and other goods, it can't compete on diesel fuel, since Pilot Flying J is the largest buyer of diesel in the country.

Van Westrop added that the street price of diesel or the price at his pumps may often be the same as at nearby Pilot Flying J outlets, but the actual price paid, especially by Pilot's large trucking customers, is nearly always less.

"I have to charge 8 cents more a gallon than Pilot just to break even," he told the newspaper.

Yash Singh of the Super Truck and Travel in Cookeville, Tenn., and other independent truck stop operators cited a number of other factors that give Pilot Flying J an edge, including rebates. Its rebate program was the focus of a 120-page affidavit, which led to an April 15 raid of the company's headquarters by the FBI and Internal Revenue Service.

"Pilot Flying J respects its competitors, but is extremely proud of their growth over recent years, which allows them to provide better service on a day-to-day basis to America's trucking companies and their drivers," said Tom Ingram, a spokesman for the company.

Pilot's 2010 acquisition of Flying J also led to an expanded stake in the fuel card business. T-Chek, TCH and EFS, or Electronic Funds Source, are all now affiliated with Pilot Flying J, according to the news report. These cards used by trucking companies collect data on miles driven, the identity of the driver and the price paid for fuel.

Records at the FTC show representatives of independent truck stop operators warned not only of the potential monopoly that would be created by the merger of the travel center business, but also of the consolidation in fuel card business.

Michael Broyles of the North American Truck Stop Network, told the newspaper that he and his colleagues have been closely watching the developments in the federal investigation and are hoping the FTC is also watching.

"If the FTC would just take a second look, that would be a plus," Broyles said.

Pilot Flying J serves approximately 5,000 customers and operates more than 650 retail locations. It is the largest operator of travel centers and travel plazas in North America.