Wheels Up rescinds blackouts for new members

Wheels Up’s move to drop new-member flight restrictions imposed in November may signal that its efforts to create more supply are working

After imposing flight blackout restrictions for most new members during their first 90 days back in November, today, Wheels Up rescinded those restrictions. New Core members depositing $400,000 had been exempted.

Previously, Core program joiners who deposited under $200,000 could not fly during their first 90 days of membership. At the $200,000 level, peak days were blacked out during the first 90 days. That’s now gone.

The only other change is during a member’s first 90 days; there will be four new as available dates: February 17, March 11, 13, and 20, 2022.

The move seems to signal that the nation’s third-largest operator, as measured by charter and fractional flight hours, has been successful in its efforts to generate extra supply.

Since June, the industry has been breaking records month after month. U.S. charter and fractional flights were 71% higher than 2019 over New Year’s weekend,

It has created stress for providers and a new normal for customers.

The demand side is not expected to ebb until at least 2023.

A survey of Private Jet Card Comparisons’ subscribers currently being conducted reveals 48% expect to fly privately more than last year with 44% flying at similar levels. Only 8% expect their private jet usage to decrease.

The record demand and limited supply caused over a dozen companies to stop or restrict jet card sales since August, although several have since restarted.

Expanding capacity

In announcing its Q3 results in October, Wheels Up said it couldn’t utilize all of its owned/leased fleet to capacity due to pilot shortages.

Like all operators, it has been putting on an extensive recruitment and retention push targeting the flight deck.

It also said it would offer incentives to owners of aircraft it manages for making jets more available for charter. That’s capacity for Core members who are contractually guaranteed availability.

Wheels Up has around 350 owned, leased, and managed private aircraft.

It supplements that capacity with third-party charter operators.

Several operators tell us Wheels Up has been increasing GRPs. The Guaranteed Rate Programs give membership providers exclusive use of the operators’ aircraft for extended periods instead of buying time flight-by-flight.

They can then use those airplanes to fulfill multiple bookings for jet card customers who have guaranteed availability. While pioneered by Directional’s Sentient Jet, it has become a core of Wheels Up’s asset-light approach.

In its 2021 Q2 earnings call, Wheels Up said its GRPs increased to about one-third of off-fleet flights. That was up from the low-single digits at the beginning of the year.

It’s not clear how Wheels Up achieved enough additional capacity or how much it needed to serve new members and roll back the restrictions. Likely, it was a combination of pilot hiring, more access to managed jets, and GRPs. However, the surprise move indicates the company feels comfortable with supply over the next quarter.

What’s next?

Yesterday, Refinitiv pegged analysts’ consensus of $1.192 billion in 2021 sales for Wheels Up. That implies Q4 revenues of approximately $300 million. It is also expected to report a significant loss as it spends more money on pilots, owner incentives, and GRPs. (Editor’s note on Feb. 1, 2022, @ 5:28 pm: An earlier estimate published by Refinitiv was incorrect and has been updated).

Wheels Up had 11,375 active members as of its Q3 earnings call. While its stock closed yesterday at $3.82, that’s something members may not particularly care about.

40% of Private Jet Card Comparisons subscribers who say they are considering changing providers cited, “Too many peak days, blackout days, or restrictions on dates I can fly.”

Wheels Up has only 10 peak days at the $400,000 level, and just 20 peak days at $200,000, and $100,000 fund tiers, among the lowest in the industry. Now, it no longer has flight restrictions on new members.

Today’s move comes after last week’s announcement that Wheels Up entered an agreement to buy Air Partner for $107 million in cash.

An official from Wheels Up declined to comment on this morning’s announcement.