The founder and CEO of Wheels Up had lots to say at this years NBAA private aviation conference in Las Vegas. He has just raised new investment funds and is growing his fleet and his membership base.
Funding
His company has raised over $200m in funding during the last few months. An equity capital raise of $117.5 million came from new investors Fidelity, and T. Rowe Price, and existing investor NEA as well as new institutional investors. This summer Wheels Up also raised a $90 million aircraft financing facility with KKR.
The funds will be used for a number of growth initiatives, including adding to the Wheels Up fleet of Beechcraft King Air 350i aircraft; accelerating membership growth through further investment in sales and marketing; continued exploration of and planning for an expansion into Western Europe and other markets; and significant enhancement of the Company’s digital platform.
“The follow-on investments from Fidelity Management & Research Company, funds and accounts advised by T. Rowe Price and NEA and the addition of KKR and others to our institutional backers, validates all that Wheels Up has achieved in the four short years since our launch,” Dichter said. “We share a common vision with our investors that Wheels Up can build on its market-leading position and further disrupt the space through enhanced digital offerings.”
While the company is planning to move into Europe, they are partly waiting for some clarity on Brexit before deciding on exactly what to do.
Planes
The fleet has grown to nearly 80 aircraft with 63 King Air 350is and 15 Citation Excel/XLSs. “We expect to add another 20 aircraft next year, to keep pace with demand from our growing membership,” said Dichter.
They are also looking at adding the bigger Citation X aircraft to the fleet, starting as soon as the first quarter of 2018. “The King Air 350i is our bread and butter” added Dichter “and we are not likely to go smaller in a turboprop than this.”
Just this summer, Wheels Up conducted its 100,000th flight, from Jacksonville FL to Nashville TN. “Flight operations for Wheels Up have the same scale as a regional airline, rapidly approaching 6,000 flight sectors per month with the continual drive to democratize private aviation,” said Gama Aviation CEO Thomas Connelly.
Members
Membership has grown to nearly 4,000 and Kenny Dichter says he’s expecting 10,000 members by 2020. “There’s no reason that by 2025 into 2030 we shouldn’t have 25,000 or 30,000 members,” said Dichter.
The mix of customers is currently 65% individuals and 35% corporate, Kenny Dichter noted he would like to grow the corporate share to 50% of the customer base.
The more a member flys the more likely they are to remain as members. As an example, members who fly more than 25 hours a year have a 98-99% retention rate.
When asked what a typical customer might look like, he gave a case of someone starting to fly 15-20 hours a year and with an income of $500k-$1m. It’s often someone who needs a flight of fewer than 2 hours and he added that these length flights make up 85% of the private flying market.
Kenny said he’s trying to figure out members who fly under 5 hours a year and may offer a different membership level for these types of flyers, something that better meets their needs.
Digital Focus
Wheels Up are putting a large focus on their digital capabilities. Kenny Dichter introduced his new head of digital who has already built a staff of 45 people that includes software engineers, data scientists and user interface folks.
The Wheels Up app offers a variety of functionality to members, in addition to just reserving aircraft. For instance, members can list their flights when they are willing to share them, and any other member can then join the flight and split the cost. At any one time, there may be 100 flights listed for sharing. As an example, a member who commutes from Boston to New York every week could post their commute on the app and find other members who do the same flight. They can then agree to share the flight and share the cost. App usage has increased 80% over the last year.
Flight Desk
The “Flight Desk” is the in-house charter team that serves members who want something other than the King Air or Citation. For instance, members who want to fly cross country or even fly over to Europe can organize a large charter aircraft through the Flight Desk.
The Flight Desk team have gone out and checked and certified 94 approved operators who meet the Wheels Up standards. This program was only launched in February 2016, but already has a $100m revenue run rate for 2017. The average spend has been $29,000 per flight and 16-17% of members have used the Flight Desk.
It’s one more sign that Wheels Up is looking to become a total aviation solution for its members.