When Kenny Dichter ended his company’s first day of trading by hammering the closing bell of the New York Stock Exchange earlier today, it marked the start of what should be an interesting ride. It’s a journey that began just eight years ago with three King Air turboprops. Now, as Wheels Up Experience, Inc., the company’s new name, it is the second-largest provider of for-hire private aviation flights, valued at around $2.4 billion, with visions that go beyond the airport.
Founder & CEO Kenny Dichter, of charter flight company Wheels Up Experience Inc., gavels trading … [+]
As the company’s stock rose 16.31%, closing at $11.50, Dichter, the founder and CEO, was already teasing the next trend, space tourism, and trying out the moniker, Space Up. While the serial entrepreneur – he launched Marquis Jet Partners in 2001 before selling it to Berkshire Hathaway in 2010 – quickly qualified plans to follow Branson, Bezos and Musk into the outer galaxies are a next decade sort of thing; he enters life under the spotlight of Wall Street with around $650 million in cash and the strongest tailwinds that the private aviation sector has seen, maybe ever.
According to Argus, June had more private flights in the U.S. than any month since October 2007. WingX reported that private jet flights over the July 4th holiday were 44% ahead of 2019’s pre-pandemic levels. A survey earlier this month of subscribers to Private Jet Card Comparisons, a buyer’s guide where I am editor, showed 69% of current private aviation users plan to fly more post-Covid than before. Only 3% said they would fly less.
Is there such a thing as too much business? NetJets, a unit of Berkshire Hathaway, the only player significantly larger than Wheels Up, has been throttling back its growth in recent weeks, creating a waitlist for its entry-level Embraer Phenom 300 and Cessna Citation XLS jets. It previously shelved sales of its Classic jet cards, which provided customers aircraft on as little as 10 hours’ notice. NetJets says volume is at the highest levels in its 57-year history.
Speaking from the board room of the New York Stock Exchange, Dichter says spiking demand won’t be an issue for Wheels Up. It uses 170 owned and leased aircraft, another 170 it manages for owners and charters when they aren’t using them, plus a partner network of operators that fly 1,200 more private planes. The model offers the flexibility to expand capacity as needed. NetJets, on the other hand, sells customers into programs operated on a fleet of jets it buys directly from manufacturers. It is expecting to take delivery of over 50 new airplanes this year.
Revenues in the first quarter soared 68% to $261.7 million for Wheels Up, buoyed by an early January acquisition of Mountain Aviation, a deal that expanded the Wheels Up fleet of Citation X super-midsize jets. That move enabled it to launch discounted transcontinental rates, bringing its prices inline with Directional Aviation’s Sentient Jet and FXAIR, and Vista Global Holding’s XO, two of the other major players.
Dichter says next on the post-IPO agenda is a closer collaboration with Delta Air Lines, its largest shareholder, a relationship that in just over 18 months netted the Atlanta-based airline a $500 million gain. He believes it is fertile ground to cultivate first-time private flyers, enticed by discounted empty leg flights, jet sharing and seats on shuttles, reaching airports the airline doesn’t serve. At the same time, Wheels Up customers can use funds they deposit in its private aviation access programs for flights on Delta. That could be attractive for companies toying with private aviation in a post-pandemic economy, but also wanting the flexibility to move money to traditional airlines when it makes sense.
Reams of publicly filed documents leading up to yesterday’s SPAC merger with Aspirational Consumer Lifestyle Corp. revealed Wheels Up is mulling an entry into the villa and yacht rental space, international expansion, and even a co-branded credit card. This month, it inked a deal as the preferred private aviation provider for American Express Centurion and Platinum members. It also expanded its lifestyle partnerships in recent weeks, adding Porsche North America, Landry’s, the upscale restaurant and hospitality group, and the National Football League Players Association.
Its merger with Aspirational brings Wheels Up closer to French billionaire Bernard Arnault, who controls LVMH, home to a host of luxury brands, including Louis Vuitton, Tiffany & Co., Dior, Dom Perignon, watchmaker Hublot, Belmond hotels and trains, among others. The special purpose company, founded by former LVMH senior executive Ravi Thakran, is backed in part L Catterton, a private equity fund he previously ran, and that includes the Arnault family.
Whether Wheels Up’s next destination is Rodeo Drive or Europe, in the near term, it will need to focus on delivering for its core customers, who spend an average of $80,000 per year on full aircraft charters. While respondents to the Private Jet Card Comparisons’ survey say they plan to stay clear of chaotic airline flights as much as possible, nearly 20% experienced service lapses on their private flights in recent months as the system has been stretched.
In NetJets’ latest announcement curtailing sales, it explained, “The vast number of flights is taxing the air travel infrastructure in ways we haven’t seen in years—everything from fueling and ramp space to catering and ground transportation are being pushed to their limits in many locations.”
For today, Dichter said, “This is the American dream.” However, the biggest challenge for Wheels Up and other players could be hanging onto current customers. Across the industry, one in five jet card users switched programs in the past 18 months.
(Note: I own 100 shares of Wheels Up Experience, Inc.)
I’m Editor-in-Chief of DG Amazing Experiences, a weekly e-newsletter for private jet owners and Private Jet Card Comparisons, a buyer’s guide comparing over 250 jet card programs from major players like Flexjet, Jet Linx, NetJets, Sentient Jet, Wheels Up, VistaJet, and XO to newcomers like FlyExclusive and boutique brokers. You’ll also find performance profiles of popular private jets, from turboprops King Air 350, Pilatus PC-12 and HondaJet to the Phenom 300, Challenger 300 and 350, Gulfstream G450, G550, G650, G700, Bombardier’s popular Global Express family, the iconic Learjet and S-76 helicopter used by both Queen Elizabeth and Donald Trump. There’s a free guide explaining various options and even a guide for first-timers and specifically what you need to know before chartering. And before you fly, find out what’s an FBO. You’ll also find a Deal Book, cataloging M&A activity and launches by key players. I’ve spent my working career in travel and luxury media, for 14 years at Travel Agent magazine, where I began as a reporter, then covered the airline industry as Aviation Editor and ended up rising to Group Publisher. In 2000 I started Elite Traveler, a consumer lifestyle magazine distributed globally aboard private jets, where I was President and Editor-in-Chief until 2014. In 2007, I co-authored of “The Sky’s the Limit: Marketing to the New Jet Set.” In 2014 I wrote “23 Ways to Create More Sales Opportunities 25 Minutes,” and in 2016 I co-authored “Secrets of Selling to the Super Rich.” Verb named me as one of the Top 25 Digital Luxury Experts to follow. For more private aviation and news on jet cards, private aviation memberships, and fractional ownership, visit Private Jet Card Comparisons’ news updates.