March 13, 2025
Kenn Ricci has become a major power in private aviation with fractional Flexjet, jet card seller Sentient Jet and a myriad of investments.
Kenn Ricci is the principal of Directional Aviation and chairman of Flexjet, Inc., whose holdings include consumer brands fractional provider Flexjet, jet card seller Sentient Jet, on-demand broker FXAir, several MROs, and many other B2B private aviation-related services.
His over four decades in private aviation, beginning as a corporate jet pilot, have been a winding road.
His first entry into the fractional segment was Flight Options, which sold pre-owned private jets and was wound down after buying Flexjet from Bombardier over a decade ago.
Growth has been organic (FXAir and Nextant Aerospace) and acquisitions like Flexjet and Sentient Jet.
During a recent webinar hosted by the National Business Aviation Association and moderated by Jay Mesinger, Ricci spoke about the history of fractional ownership, the impact of NetJets and Warren Buffett, navigating Covid, the role of private equity, the challenges of selling jet cards, the Trump tariffs, and what’s ahead.
The second-largest private jet flight provider, Flexjet, recently placed a record order for new private jets with Embraer.
It has grown to operate 600 to 900 flights daily, with the 1,000 flight mark in sight.
We’ve edited Ricci’s comments into a question-and-answer format.
There is a link to the entire webinar at the end.
When I was running Corporate Wings, a company with seven employees, we would have a company meeting every Friday at the bar. It was a different way to manage than when you have a company with 5,000 employees (and over $4 billion in annual revenue). You find the transition from a small company like Corporate Wings to a large company like Flexjet; you can never overcommunicate. You have to continue with the message, and you have to stay on point. There are a lot of people growing in different directions if you don’t do that.
Directional Capital: we’re an inch wide and a mile deep. We’re not a fund. We’re more of a family office where we invest our own capital – private aviation only. If you look at our investments over the years, we look at investments that can react to each other. We made an investment in the simulator training business, but we knew going in it was something Flexjet could utilize. We’ve made investments in the parts industry and the maintenance industry that our other companies could utilize where there was cross-pollination. We have no diversity. We have private aviation and cash.
This has been an overnight success story. It only took 35 years. The concept of fractional is wonderful. Up until fractional began, the private aircraft charter market was really an airline adjunct; in other words, where the airlines were selling seats at a price, the charter market was to give you a dynamic price that happened given the time of day, type of aircraft, and demand. Fractional aircraft changed the transaction. It made it non-airline-like. It made it more like joining a club. You pay a fee to join, pay a monthly fee, and then you pay a small fee when you play a round of golf.
Around 1990…NetJets was looking for aircraft. In those days, the manufacturers weren’t as efficient…Hawker had a lot of whitetails…they weren’t able to sell. NetJets came in and made the first transaction where they interacted with the manufacturer and said we would take your excess inventory. Almost every manufacturer followed that format. Flexjet came out of Bombardier. Citation had Citation Shares. Travel Air came out of Beechcraft. I was late to the party. By the time I figured out fractional would be something, all the manufacturers had somebody to work with. People always say you figured it out with used aircraft. It was really the only option left.
As an entrepreneur, you always think every idea you come up with is brilliant…The idea of fractional in the mid-90s with used aircraft was my idea. We went out to banks because you have to have a core fleet…If two people buy an airplane, you need two airplanes in case they want to fly at the same time…We estimated we needed about $60 million to $80 million for core fleet buying used aircraft. We went out to the banks with my great idea…and maybe we had $7 million, $10 million in debt available. Nobody understood at the bank where’s my security…Then, in 1998, Warren Buffett bought NetJets. And every bank I had been to thought I was a genius all of a sudden. And they were all looking to get into the industry and we had $500 million. In some way, but for Warren endorsing our industry, I never would have found the debt capital to be able to build the inventory and go as fast as I did.
READ: Comparing the 5 ways to fly by private jet
Fractional creates a lot of moats. There is such a first-mover advantage. I say today it takes about 150 aircraft in a fractional model to make profitability…By the way, this is looking in hindsight. We didn’t know this at all in 1998. I had a beautiful idea this would be widely successful with 10 aircraft. Looking back, having that debt capital to grow the industry was one of the keys. It’s also a key in our industry that people overlook. We are an industry that is so capital intensive. You’ll hear people talk about EBITDA and EBIT. But the reality is if you are not watching the return on invested capital, it will be problematic.
That model looks great when costs are flat because you are selling something that is a fixed price for 12 months, and during Covid, you had those rapid challenges. It was an immediate challenge. Pre-Covid (Flexjet was) flying 200, 250 flights a day. When Covid hit, we went to eight (flights per day). Our question was, would our owners, would the people who bought in, our (fractional) owners, that were paying the monthly fees leave the club…they didn’t; they hung around seeing what would happen. In some ways, even though we knew…we were going to lose money running off those cards, we also did not have them (used right away) because people were sitting on the sidelines, so it gave us some time and runway to absorb what we knew was going to be $20 million, $30 million in losses in the card program.
READ: Covid-19 & Private Jets: 5 years ago, the worst was yet to come
Looking in hindsight, nobody really could project the amount of infrastructure and amount of aircraft you would need to reach profitability. Our deal with (Bombardier to buy) Flexjet was to trade off their operation of the fractional business for an order book. Manufacturers went back to selling aircraft…We are back to a new aircraft program…In year five, you have the option to renew at a higher operating cost or to buy new again, and it’s about 50-50. It turned good for the manufacturers because they are replenishing our fleets.
Covid had some interesting outcomes. The frugal wealthy showed up. There was a whole group of very wealthy people who were frugal. Maybe they didn’t want to spoil their kids. Maybe they didn’t want their employees to think they could fly privately or had that type of money. We thought Covid was the plague. We thought if you were within 20 feet of somebody, we could die. So, people looked past their frugality in order to fly safely to see their grandchildren. And post-Covd, the cats are out of the bag. People already know you can afford it. They liked it so they are staying with it. We are not seeing much attrition of that frugal wealthy group that showed up.
Covid empowered the airlines to be more policemen, so they moved more away from the service side. It became sit in your seat, put your mask on, so it became a different type of transportation.
READ: Airline, airport ‘mess’ driving more than half of new private jet flyers
Our average owner got younger, probably by about 10 years. That gives us a much longer client to work with…now our average age is in their 50s. There are a lot of reasons for this. We see a lot of wealth transfer that ends in (the) fractional (private jet) business. What also came up is people went larger and farther. In the past, they took the airlines from New York to London and then picked up a fractional to go to their destination. That changed during Covid because you couldn’t be exposed…and international airlines were just as problematic. We’ll do 15 flights a day across the Atlantic, which was unheard of before. They’ve gotten more international and larger. The Phenom 300, which is entry-level and used to be our best-seller, now pales in comparison to the Praetors, the Challengers, our mids, and super-mids, which seem to be an entry point.
As a good leader, I go into every year totally paranoid. With all the recessions…I’m old enough to have lived through four recessions…We are not a high-growth industry. We are an industry that grows seven to 12% a year. It’s a subscription model we would like to maintain. In other parts of the industry beyond Flexjet, we had very lofty multiples. In 2016, and particularly post-Covid, private equity found us. And private equity has injected a tremendous amount of capital into all parts of our industry. And I think a lot of these models are starting to fail, so I think there is going to be some consolidation, some busted plays, and for somebody like us opportunities.
The problem is we don’t know. It’s the uncertainty. If you are a foreign manufacturer, somebody like Bombardier, they are going to have to absorb some costs because planes are under contract, but long-term, what does it mean to the parts that come across? This is not a correct thing to say, but we have an economy that is two economies. There is an economy of the wealthy. And one of the things I’ve seen is the economy of the wealthy is resilient when paying for something they want…I’ve been shocked at many of the long-term costs I thought (would never have been accepted), so I think long-term our clients will absorb it because they want the service…I think we are all just confused for the short term.
READ: Here’s how Trump tariffs could impact fractional private jet buyers
Watch the entire webinar here.
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