Can Wheels Up Succeed By Diversifying Private Aviation?

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

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

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

With memberships starting at $2,995 (aircraft rentals, of course, are additional) can Wheels Up succeed by ‘democrafying’ and diversifying the notoriously non-diverse private aviation industry?

Wheels Up CEO Kenny Dichter told CNBC, “2020 was the beginning for a big democratization for us. We saw so many new people who had never flown private before actually pick up and either join Wheels Up or come on to the platform and fly.”

Wheels Up highlights a commitment to diversity, equity and inclusion, prioritizing “cultural sensitivity and fluency across a diverse target audience (i.e., Female, BIPOC and LBGQT+).”

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

Ms. Chung was president of 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 life-long interest in aviation.

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

To Ms. Chung, the “Experience” part of Wheels Up is an important selling point. The energetic Chung says she knows many “members who don’t fly but go for the events. We’re a lifestyle company!”

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

COVID-19 has been surprisingly good for private aviation companies like Wheels Up. Remote workers, business travelers, families and other passengers (and their pets) still needed to travel in spite of massive cuts in commercial airline schedules. COVID’s comeback with the delta variant is still affecting commercial airlines; Southwest says bookings have slowed and cancellations have risen.

Frankly, many find commercial flying today rather nasty. Those who can afford to often choose to avoid airport traffic, flight delays, crowds, and TSA lines by flying private. Wheels Up says increasing number of wealthy people and business leaders are doing exactly that.

CEO Dichter says the company plans to ‘democratize’ the industry by increasing the number of millionaires with a net worth of under $5 million who fly privately by 40%. By 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 growing to $80 billion by 2025.

How many can afford the Wheels Up membership fee, plus aircraft rentals of $5000 per hour and up? More than you might think. There are 20.27 million millionaires in the United States, and over 5.6 million U.S. households have $3 million or more. And U.S. millionaires are getting more diverse; about 8% are Asian, 8% of US millionaires African Americans (about 1.8 million people) and 7% (about 1.6 million) Hispanic.

In terms of businesses, there are more than 9,500 U.S. companies with over $20 million in revenue, a prime business target for Wheels Up. More than 11.6 million firms are owned by women, generating $1.7 trillion in sales as of 2017. Of these, 5.4 million firms are majority-owned by women of color.

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

The partner list also includes Delta Airlines, which became an equity owner in the company after Wheels Up acquired 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 spokesperson 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 could be spent on Wheels Up rentals or towards Delta flights.

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

Wheels Up may not become the next Uber or Airbnb, as the company is targeting a smaller niche. But even First-Class travel on airlines is not what it was, leaving upscale passengers open to alternatives. As Ralph Waldo Emerson wrote in a different contest, “It’s not the destination, it’s the journey.”

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