Can the wheels succeed by diversifying private aviation?

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Wheels Up Experience is not an airline, but it has access to more than 1,500 aircraft. Wheels Up is not a carrier, but last year the private jet company, whose CEO calls it an “Uber in the Sky”, flew 150,000 people.

Comparisons with on-demand ‘app-based’ companies like Uber are not that far off. With its membership model (it claims 11,000 active users), Wheels Up connects users with private flights on its owned, managed and third-party aircraft via its “Look. Order. Fly, ”app. The app lets users search Wheels Up’s private fleet to find a flight (with crew) for an upcoming flight. The company owns or leases about 300 aircraft with access to a further 1200.

In mid-July, Wheels Up became the first private carrier to trade on the New York Stock Exchange, with the stock symbol UP.

With $ 2,995 memberships (plane rentals are extra, of course) can Wheels Up succeed by ‘democratizing’ and diversifying the notoriously non-diverse private aviation industry?

Wheels Up CEO Kenny Dichter told CNBC: “2020 was the beginning of a great democratization for us. We saw so many new people who had never flown privately before actually picking up and either joining Wheels Up or getting on the platform and flying. ”

Wheels Up highlights a commitment to diversity, equality and inclusion and prioritises “cultural sensitivity and fluidity across a diverse audience (ie, Women, BIPOC, and LBGQT +).”

The company makes its own efforts to diversify. Four members of the Wheels Up eight-person leadership team are women. Among them is Chief Growth Officer Stephanie Chung, the first African-American woman to head a U.S. private carrier.

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Ms. Chung chaired JetSuite from August 2018 to April 2020. She has also worked for Bombardier and in multi-million dollar field sales for US Airways. She credits her upbringing as an “Air Force brat” for her lifelong interest in aviation.

I met Mrs. Chung at a Wheels Up Porsche Experience event. (Porsche is a Wheels Up partner.) Wheels Up held the event for the C200 group of female executives; I was one of four men out of the crowd at thirty.

For Mrs Chung, the “Experience” part of Wheels Up is an important selling point. The energetic Chung says she knows many “members who do not fly but go to events. We are a lifestyle company! ”

Ms. Chung, a breast cancer survivor, helped drive Wheels Up’s monthly breast cancer awareness campaign. One of the company’s themed aircraft is The Pink Plane, to raise awareness about breast cancer and help support the Dubin Breast Center of The Tisch Cancer Institute in New York.

COVID-19 has been surprisingly good for private carriers like Wheels Up. Teleworkers, business travelers, families and other passengers (and their pets) still needed to travel despite massive cuts in commercial aircraft. COVID’s comeback with the delta variant still affects commercial airlines; Southwest says bookings have slowed and cancellations have increased.

Honestly, many people think that commercial flight today is pretty ugly. Those who can afford it often choose to avoid airport traffic, flight delays, crowds and TSA routes by flying privately. Wheels Up says an increasing number of wealthy people and business leaders are doing just that.

CEO Dichter says the company plans to ‘democratize’ the industry by increasing the number of millionaires with a net worth of less than $ 5 million flying privately by 40%. In doing so, Wheels Up hopes to expand the $ 31 billion private aviation market to a ‘democratized total addressable market’ of $ 51 billion. Wheels Up sees this grow to $ 80 billion by 2025.

How many can afford the Wheels Up membership fee plus $ 5000 airfare per flight? Hour and up? More than you might think. There are 20.27 million millionaires in the United States, and over 5.6 million American households have $ 3 million or more. And American millionaires are becoming more diverse; about 8% are Asian, 8% of American millionaires are African Americans (about 1.8 million people) and 7% (about 1.6 million) are Hispanics.

In terms of companies, there are more than 9,500 U.S. companies with over $ 20 million in revenue, a primary business goal for Wheels Up. More than 11.6 million companies are owned by women, generating $ 1.7 trillion in sales from 2017. Of these, 5.4 million companies are majority owned by colorful women.

Wheels Up aims to provide members with experiences as well as exclusive transportation. The company enters into a partnership with Porsche for lifestyle and driving. Porsche also supplies SUVs to transfer Wheels Up members from their private flights to airport centers to transcontinental and international flights. Then there is Inspirato (luxury travel), Landry’s restaurants, AMEX (membership discounts and flight credits for Platinum Card members), Hilton’s Waldorf Astoria hotel, Nantucket Shuttle Service and Abercrombie & Kent.

The partner list also includes Delta Airlines, which became an owner of the company after Wheels Up bought Delta Private Jets. So far, the acquisition has been a success (on paper) for Delta Airlines. The deal gave Delta 24% ownership of Wheels Up, equity, which in April had a reported value of $ 520 million.

Wheels Up’s relationship with Delta Airlines also lets it market to millions of Delta customers. A Wheels Up spokesman told me that if a member paid $ 100,000 in advance, that person could become an instant elite Delta Airlines Diamond Medallion SkyMiles member. The deposited cash can be used on Wheels Up rentals or for Delta flights.

Although private aircraft do not have to meet the same standards as commercial airlines, Wheels Up complies with its maintenance and safety standards. The company uses well-known aircraft operators such as Delta Private Jets, Gama Aviation, TMC Jets, Mountain Aviation. Operators undergo an assessment and approval process for safety, operation and maintenance. Wheels Up says its aircraft will be flown by 2 pilot-rated pilots with at least 3,500 hours of flight experience.

Wheels Up may not be the next Uber or Airbnb, as the company is targeting a smaller niche. But even first-class travel with airlines is not what it used to be, leaving upscale passengers open to alternatives. As Ralph Waldo Emerson wrote in another contest: “It’s not the destination, it’s the journey.”

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