‘We see an opportunity to bring private flying to millions’: Wheels Up Founder & CEO Kenny Dichter

Kenny Dichter: wants to bring private flying to millions of new customers.

An ambitious plan to attract millions of new customers to private aviation, using smart phone technology, was unveiled by Kenny Dichter, CEO of the private aviation membership company Wheels Up, at Corporate Jet Investor’s Miami 2019 conference in Florida.

“We see an opportunity to bring private flying to millions – and the private flying lifestyle to the world,” Dichter told delegates early this month at the Miami Beach conference. “In private aviation, we sell the sexiest product in the world, thanks to all the OEMs [original equipment manufacturers], to the sexiest people in the world – the movers and shakers; whether they be high net worth folk or businesses.”

But the opportunity is not limited to the high net worth individuals who are currently the sector’s main customers. “Private aviation is something that all of humanity is hard-wired to be part of.” Dichter outlined a bold vision of converting the Total Addressable Market (TAM) into millions of new customers. For inspiration he looked to the global ride-sharing company Uber. “The Total Addressable Market for taxis and limousines only 10 years ago was about $11bn in the US, today it is $200bn,” said Dichter. “I think collectively as a business sector, there are 100,000 people in businesses we are servicing today. At Wheels Up we want to service 10, 50, 100 times that number.”

‘2m people have private aviation money’

The TAM for private aviation is 2m people, he claimed. “When you look at the numbers, 2m people have private aviation money. Those 2m people would spend $10,000 to $15,000 a year flying in our space if we had rides for them. Even If you serve 100,000 people and they spend $10,000 each, there’s a $1bn dollars for you.”

The keys to unlocking that market potential are the use of smartphone-geolocating technology and targeting new customers who want to fly low hours each year, said Dichter. “We are the last business in the world not to be running its core offerings on a smartphone. The iPhone is the connective tissue that is going to connect [with new customers] to make our TAM a hundred times bigger than it is today.”

Using smartphone-geolocation technology could help fill empty seats on relocating aircraft, he explained. “There are planes on the ground here in Miami that need to be moved north. If you can get a group of four or five people together, you’re probably not more expensive than a commercial business-class ticket up to New York. The smartphone is going to geolocate those airplanes and people and, with our new membership costing a couple of thousand dollars, everyone’s going to have access to that.”

‘Everyone’s going to have access’

Smartphone technology in the form of automated booking systems is already making a big impact for Wheels Up. The future lay in developing a next-level platform that connect flyers to aircraft at scale. “We have done hundreds and hundreds of digital bookings without human hands touching them. People can hit three buttons on their smart phone and can get a quote, and confirmation, and nobody touches anybody. We have grossed more than $5m in less than a few months, all untouched by human hand.”

Dichter predicted that business will grow 50x – 100x times during the next three to five years. As evidence, he pointed to the high efficiency of Uber vehicles in New York City. “Taxis have a fare in the back of them 35% of the time and they are chasing a fare 65% of the time. Uber, using geolocation technology, is full 65% of the time and empty 35% of the time.”

Other key factors were targeting short-haul flights and less-than-frequent flyers. About 80% of flights in North America are less than two hours in length and that number rises to 85% in Western Europe. Servicing that market sector represented a huge opportunity for growth, said Dichter.

Those that fly private less than 10 hours a year present another target area. The average flyer in private aviation is currently a high net worth individual flying fewer than 50 hours, and those hours were predicted to fall. “So, we need to start focusing on those five- to 10-hour flyers,” he said. “The five-to-10-hour market [customer] is the one we are really excited about, the one who will generate $25,000 to $50,000 of flight revenue a year.”

‘Gets 1m people moving into our airspace’

But it was a membership model rather than a fractional model that offered the biggest scope for growth. “I believe that the membership model is going to be the one that bangs the TAM and gets 1m people moving into our space.”

In 2013 Wheels Up saw a pent-up demand for short-haul, private-flight solutions, said Dichter. Based around the King Air 350i, the company launched a membership model designed to disrupt the private-aviation sector. Since then the company has built up a fleet of 119 owned aircraft and a partner fleet of more than 1,250 aircraft. The company has sold more than 7,500 memberships and achieved an enterprise valuation of $1.1bn.

Meanwhile, the longest economic expansion in US history was set to continue “until  at least mid-2020, if not beyond”, Gus Faucher, chief economist with PNC Financial Services Group, told delegates during his keynote session.

Corporate Jet Investor’s CJI Miami 2019 conference took place at the Fontainebleau Hotel in Miami Beach on November 12th and November 13th.