Gaining Altitude
Meet Wheels Up, one of Inc.’ s Private Titans—the nation’s most dynamic non-public businesses. No, it’s not Uber for jets. But the rapidly growing company is lowering the price of entry into the world of private aviation.
Wfounder and CEO Kenny Dichter calls his company the Netflix of aviation. That would be accurate—if Netflix were built for the 1 percent. An initial $17,500 individual subscription gets you a year of access to private planes essentially on demand, which explains the company’s client list of star athletes (Tom Brady) and musicians (Ciara), as well as execs like Hain Celestial CEO Irwin Simon. “Obviously,” Dichter says, “it’s wildly important to these folks that they get from A to B in a very, very efficient way.”
For years, the fractional jet ownership model—pioneered by NetJets in 1987—has prevailed. But that requires hundreds of thousands of dollars in upfront costs for the customer. Companies like Wheels Up are trying to expand the private-aviation market by lowering the barriers to entry.
Scheduling a flight is as simple as opening an app and punching in your desired itinerary. The startup’s eightpassenger King Air 350i and Citation Excel planes—which offer amenities like Wi-Fi and, yes, complimentary snacks and booze—can take off and land at 5,000 airports throughout the United States, as opposed to the 500 that support commercial flights.
The first-year membership fee ($29,500 for a corporate account) decreases by about half for subsequent years, but you’ll pay upwards of $4,000 for each hour of flight time. Clearly, it’s not for everyone—yet with about 5,000 customers, the company will exceed $400 million in annual revenue in 2018.
Wheels Up sees an increasingly rich, so to speak, source of customers in the front of commercial airlines. “Better than 30 percent of our new members come from commercial first class or commercial business class. They haven’t been in private aviation before,” Dichter says. “Considering that 10 million people fly first class or business class in a given year, we really like our addressable market.”
Dichter, who is also a co-founder of Tequila Avión, launched another private-aviation startup, Marquis Jet, in 2001. He sold that company to Warren Buffett’s Berkshire Hathaway in 2010 and, a week after his two-year noncompete agreement expired, founded Wheels Up. Within a year, the company had a fleet of 20 planes. That number is now close to 100. “It’s very difficult to compete without scale,” he says.
The company finds itself in an expanding market. The U.S. charter-flight industry grew to $23 billion in 2018, according to market researcher IbisWorld—up from about $18 billion five years ago. Competitors like JetSmarter, V2 Jets, and XOJet have launched in the past dozen years. Others, though, like BlackJet and Beacon, have quickly folded, unable to gather enough demand to stay aloft.
Wheels Up tries to separate itself with a benefits program that includes discounts with partners that might appeal to this new jet set: chauffeur services, yacht companies, Italian leather luggage makers. Wealthy alumni can buy seats on shuttles to their alma maters’ football games or to events like the Super Bowl and the Masters. Some customers use it to make quick turnarounds on business trips—or to grab dinner or see a show in another city.
Dichter, who is eyeing an IPO next year, won’t democratize private aviation, but he can certainly expand access: “We believe we can make this a much bigger space moving forward.” —KEVIN J. RYAN