“Wheels Up will be private aviation’s number one brand in the next five to six years.”
— Kenny Dichter
One thing you cannot fault Kenny Dichter for is his ambition. Wheels Up may have only taken delivery of its first King Air 350i, but Dichter did not launch the new membership company to offer just one King Air.
Having made his name with Marquis Jet, Dichter launched Wheels Up in August 2013, with an order for up to 105 King Air 350i aircraft. He expects to enlist 300 members by the end of 2013 and between 1,000 and 1,500 by the end of 2014.
Dichter likens the difference between Wheels Up and the rest of the private aviation industry to the difference between old media and new media. “We want to be the Google or the Twitter or the Facebook of the space,” he says.
Dichter compares Wheels Up to a private member’s club. From $15,750, members will be guaranteed access for 300 days of the year to the company’s fleet of aircraft, which so far, includes the first deliveries from its “$1.4 billion commitment to Beechcraft” and from 2014, will include 12 Bombardier Global business jets owned by VistaJet and operated by Jet Aviation.
Wheels Up plans to initially focus on seven key areas in the US, which includes New York (Teterboro Airport), Los Angeles (presumably Van Nuys), Seattle, Denver, Dallas, Chicago and Palm Beach.
In October 2013, the company chose Gama Aviation to operate and manage its fleet of King Airs, which will be maintained by Beechcraft, but Dichter says Wheels Up intends to use more third-party operators in the future, giving its members access to the entire spectrum of business aircraft at an hourly rate, ranging from light aircraft to large-cabin business jets and even helicopters. “We want to be your total aviation solution,” says Dichter. “We want our members to look at Wheels Up as their flight desk.”
Dichter also plans to launch an affiliated lifestyle brand named Wheels Down, which will curate exclusive functions based around major events like the Super Bowl, the Kentucky Derby and Art Basel and will offer a concierge service when they are on the ground.
With a maximum range of around 2,000 miles and the ability to carry up to nine passengers, the King Air 350i may seem like a humble aircraft compared to a light jet, but Dichter draws parallels with the Jeep and the Range Rover, which were both launched as military vehicles during the second world war, but have since become synonymous with parents ferrying their children to school.
“The investors feel really comfortable with the King Air; it is an iconic workhorse airplane,” he says. “We’re taking nine [King Airs] this year and we have another 18 coming in 2014.”
Having founded Marquis Jet, the first ever fractional jet card programme, and served as vice chairman of NetJets, the leading fractional jet ownership provider, Dichter learned that fractional jet owners were, on average, flying distances of just under two hours. He says he saw a gap in the market and identified the King Air as an ideal aircraft for people used to fractional schemes.
“I saw an opportunity to further democratise the aviation pyramid,” says Dichter, who will modernise the King Air by painting it using a colourful blue and white scheme and ensuring that every King Air operated by Wheels Up is VIP-outfitted and Wifi-capable.
Dichter also claims that the aircraft is “perfect for Europe,” which is a region he is looking to expand into in 2015.
After selling 4,000 jet cards and generating over $4 billion in revenue for Marquis Jet, Dichter is now involving many the same investors that profited from his old company with Wheels Up. “It’s not a difficult phone call for me to make,” he says.
Dichter says he had already found between 60 and 70 investors in 2001. “In 2003, they had already made four times their money,” he says.
For Wheels Up, Dichter used a similar business model. “I figured if I would have several individuals investing between $100,000 at the low end and several million at the high end,” he says. The clever part is that Dichter is then able to sell his investors membership.
At present, Wheels Up employs around 30 people and operates from a plush headquarters in New York City’s Times Square. “Our business plan is our people,” he says.
Dichter says he can generate over $26 million purely in membership revenue from the 1,500 members he expects to sign-up by 2015.
Beechcraft: Wheels Up’s order for up to 105 turboprops is Beechcraft’s largest ever order, but a large part of the contract is Beechcraft providing maintenance to the aircraft, meaning the order could be worth up to $788 million.
VistaJet: From 2014, VistaJet will base a fleet of Bombardier Global business jets in the US, choosing Jet Aviation to operate the aircraft and Wheels Up to act as an exclusive sales agent. Dichter says: “We need to sell 100 people 100 hours to be successful with VistaJet.”
Gama Aviation: Although it will wholly own its aircraft fleet and will be responsible for safety (in co-ordinance with Beechcraft), Wheels Up will not actually operate any of its aircraft. Barring the 12 Global jets, which will be owned by VistaJet in the US and operated by Jet Aviation, Gama Aviation will be responsible for Wheels Up’s operations, including flying the aircraft.
JetSuite: At NBAA 2013, Wheels Up signed an agreement with JetSuite, which will give Wheels Up members access to JetSuite’s fleet of Embraer Phenom 100 and Cessna Citation CJ3 business jets with priority booking, while allowing JetSuite clients to enjoy Wheels Down offerings.
Jefferies: Although Dichter is raising the equity, the debt is being arranged by Jefferies, a global investment bank. When Wheels Up launched, David Baxt (Dichter’s former banker) left his position as the head of the bank’s aerospace and defense division to join the company as president.
Happy Design Studio: Wheels Up chose the French design studio to craft the exteriors of its fleet of King Air 350is using a blue and white colour scheme. Didier Wolff, founder and designer, said: “Wheels Up is pushing for a different and exciting product, and we’re positive this will be a success.”
Make sure you also read the guide to Wheels Up and Kenny Dichter on Corporate Jet Investor.