After helping develop the 25 hours per year private jet traveler with Marquis Jet Partners before selling it to NetJets, and then launching Wheels Up in 2013 with a pay-as-you-go model attractive to folks who fly under 25 hours per year, Wheels Up CEO Kenny Dichter says his next goal is to bring a branded, high-quality offering to people who fly under 10 hours per year.
Speaking to Private Jet Card Comparisons during the 2018 National Business Aviation Association (NBAA) Convention & Exhibition in Orlando Dichter said to expect a launch next year, Dichter said, “The Wheels Up program has attracted a meaningful number of five to 15 hours per annum fliers…We believe the addressable market for the zero to 10-hour flier approaches one million households and businesses in the US.”
Currently, he says Wheels Up’s 5,000 members spend an average of $80,000 per year. To join as an individual or family costs $17,500 and then $8,500 annually thereafter. If one takes its current hourly rate on the King Air 350i of $4,832, including the 7.5% Federal Excise Tax, and pulls out $10,000 per year in membership fees, the math would indicate customers average about 15 hours per year of flying.
Dichter declined to say what the new membership will look like, however, the hourly cost when you amortize annual or joining fees would ostensibly go down. For example, $8,500 spread over 40 hours is just $212 per hour whereas at five hours it adds $1,700 to your hourly rate. Dichter says once an on-demand charter customer gets the Wheels Up experience, which includes a full range of lifestyle benefits, they up their private flying to avoid the hassles of commercial air travel and become a 20 to 30 hours per year flier.
In looking for areas to expand, Dichter says he plans to leverage the equity that has been built with the Wheels Up brand. “Not that long ago Amazon was delivering books. Then it came up with the Prime business…You know if you get something in the Amazon box it stands for quality and somebody is going to stand behind it,” he told a press conference earlier in the morning.
Dichter said his Flight Desk brokerage, which handles on-demand charter for members, now has 11 operators and 85 aircraft to serve its clients when in Europe and he would like to eventually base some of his King Air 350is there noting 85% of private trips there are under two hours, the sweet spot for turboprops.
The Flight Desk, which Dichter describes as “verified charter” perhaps provides a window into more growth opportunities. He believes with its current fleet of King Airs, Citation Excel/XLS and now the super-midsize Citation X the company is only capturing about 40% of the private aviation spend from current members. In other words, Wheels Up customers use other providers when they need super midsize and large-cabin jets. He said the Flight Desk currently books about $90 million in charters, including when it needs supplemental lift to accommodate members.
In terms of technology, Dan Crowe, the CIO, a veteran of AutoTrader said, “(Private jet charter is) ripe for being digitalized (and the company is) intently focused on consumer expectations for digital.” He said Wheels Up currently has over 50 technologists and is building a data science team.” He told predicted, “The (company with the) ability to predict demand, availability and set the right prices and set the right algorithms is going to win.”
Wheels Up doesn’t operate its fleet, but contracts to GAMA Aviation, an IS-BAO Stage 3, Wyvern Wingman and ARGUS Platinum operator which currently has 400 pilots dedicated to Wheels Up in addition to 220 on staff. While membership provider 24 hour lead time for reservations with guaranteed availability and fixed one-way rates approximately 300 days per year, members can prepay to increase the number of days for guaranteed availability. Wheels Up also offers a corporate travel program priced at $29,500 in the first year then $14,500 annually thereafter.