March 10, 2024
Wheels Up and Air Partner have filed documents this morning in the U.K., agreeing for the New York-based provider to acquire the Gatwick-based aviation services company, which offers jet cards and on-demand charter.
It adds new business lines for Wheels Up, including group charter, freight, specialist services, safety, security, emergency planning and incident response, and managed services.
Founded in 1961, Air Partner has 450 employees and operates from 18 offices on four continents.
The deal between the two publicly traded companies is valued at $107 million. In its latest full financial year, which ended January 2021, Air Partner tallied $370 million in revenues and a $60.5 million gross profit.
For the first nine months, Wheels Up revenues were a record $849 million, with full-year results expected in early February. However, the year-to-date loss increased from $33.4 million to $120 million.
Wheels Up Chairman and CEO Kenny Dichter, said, “This acquisition will allow us to offer existing and future customers even more compelling and seamless options for private travel, expand the reach of our marketplace in key markets around the world, and add important operational capabilities to our network.”
In terms of their private jet businesses, Air Partner is a straight broker, selling jet cards and on-demand charter. Wheels Up offers a membership with annual fees. It uses a hybrid model leveraging its fleet of 350 owned, leased, and managed private aircraft, plus 1,500 more as needed through third-party operators that meet its safety standards.
Wheels Up is in a virtual dead heat as the second-largest U.S. operator based on fractional and charter flight hours. With over 10,000 members, it also rents aircraft from third-party operators for extended periods, controlling the scheduling and providing itself with additional inventory beyond its fleet. Air Partner charters on a flight-by-flight basis. However, you need to be accepted to its JetCard program, so it only takes efficient flying customers. That should tie nicely together.
While smaller, Air Partner has relationships with operators in Europe and the Middle East. That should come in handy if Wheels Up wants to buy operators there. Over the past three years, it acquired Delta Private Jets, Gama Aviation Signature, Mountain Air, and TMC Jets. It could also simply secure extra capacity with long-term rentals from the operators. It calls those GRPs, short for guaranteed programs. The operator doesn’t have to worry about keeping its plane moving. Wheels Up members do that.
While neither company offered much detail, an official release noted, “Bringing the two companies together will enable Wheels Up to offer customers an expanded international travel solution, including direct travel options to and from Europe, as well as intra-Europe and intra-U.S.”
Assuming Wheels Up keeps the parts of Air Partner’s jet card and charter offerings it doesn’t have, here’s where Wheels Up members would see benefits:
For Air Partner JetCard members, benefits of the Wheels Up membership would include:
The acquisition is expected to close later in the first quarter, subject to shareholder and regulatory clearances in the U.K. and Italy.
The companies said they would share more then, so think March or April, although they may drop some teasers out earlier.
In November, Wheels Up revamped its membership program. It raised some prices and extended call-outs. But in a move counter to most other programs, it didn’t add peak days. At its highest deposit level, there are only 10 peak days.
While neither stopped selling jet cards as demand surged to record levels, Air Partner introduced over 30 blackout dates during the Thanksgiving and Christmas/New Year’s holidays. It didn’t feel comfortable it could source flights in a market with too much demand for the available supply. By announcing the changes in early October, it gave members notice to find other solutions
How it will shake out is TBD. Wheels Up charges annual membership fees. Air Partner doesn’t. Both include deicing. Wheels Up guarantees WiFi across all categories. Air Partner doesn’t. Wheels Up has different call-outs and minimums in the West. Air Partner’s terms are the same nationwide.
If Wheels Up’s integration of Delta Private Jets provides guidance, it was aggressive in keeping DPJ jet card customers. It was selling both programs for nearly six months after the acquisition closed. Still, it curtailed the DPJ Mexico and Caribbean service area, so it’s difficult to predict what will happen.
