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A little more than four years after launching its business, private aviation provider Wheels Up has built a fleet of 78 Beechcraft King Air 350is and Cessna Citation Excel/XLSs and is approaching 4,000 members, but is setting its sights on a 100-aircraft fleet by the end of next year and 10,000 members by the end of 2020. And, all the while, the company is positioning itself to go public in the next year or two.
CEO and co-founder Kenny Dichter said the company has remained on track with its business plan—“we are where we thought we’d be four years ago”—but sees substantial opportunity for growth. Noting an anticipated run rate of $300 million this year, the company has the potential to become a billion-plus-dollar business, he said. Dichter credited his team and strong partnerships with Textron Aviation and its fleet operator, Gama Aviation, for paving the way for growth. He also noted the success of the King Air, describing it as a "workhorse."
The company in late June closed on a credit facility that “locked in our ability to take our next 17 King Airs.” The company further is eying expansion into Western Europe, first from its Flight Desk digital platform—which connects its members with “partner” aircraft—and then with the King Air program. A decision on the latter is anticipated by early next year.
Four years after launching the business, private aviation provider Wheels Up has built a fleet of 78 Beechcraft King Air 350is and Cessna Citation Excel/XLSs and is approaching 4,000 members. Shooting for a 100-aircraft fleet by the end of next year and 10,000 members by the end of 2020, the company is positioning itself to go public in the next year or two.
Wheels Up (Booth N504) opened for business in 2013 with a firm order for 35 King Air 350is and options for up to 70 more in what had been the largest order for the twin turboprop. CEO and co-founder Kenny Dichter outlined a vision of building a membership-based private aviation transportation firm that would tap into the pool of airline passengers and could attract 1,000 members in the first few years, with a goal of 10,000 members eventually.
While those plans might have drawn some initial skepticism in the industry, the company has remained on track with its business plan, said Dichter. So far the company has taken delivery of 63 King Air 350is and 15 Citations. And on July 5, Gama Aviation LLC, the company that operates the fleet, conducted the 100,000th Wheels Up flight, from Jacksonville, Fla., to Nashville, Tenn.
In addition to reaching that marker, Gama reported that Wheels Up flights continue to reach new heights, with 400 conducted in one week last summer and 100 passenger legs flown in a single day, also last summer. “Four years ago, Wheels Up was an idea, a PowerPoint presentation and a spreadsheet,” said Gama Aviation LLC president and CEO Thomas Connelly. “Now its flight operations have the same scale as a regional airline—it is fast approaching 6,000 flight sectors per month—with the continual drive to democratize private aviation.”
The company is on pace to top 4,000 members by year-end, Dichter said, adding that it is tracking toward an anticipated run rate of $300 million this year.
Long-term Growth Plans
Dichter sees substantial opportunity for growth. In late June the company closed on a credit facility that “locked in our next 17 King Airs.” The $90 million facility was with New York-based private equity firm KKR.
Dichter can see an initial public offering. in 12 to 24 months. “Our Wall Street partners view the public market as the natural place for Wheels Up,” he noted. The projected time frame of 12 to 24 months is "short, like tomorrow. We have to have all our ducks in order. It’s a very exciting time for us.”
Long-term, he sees potential for Wheels Up to be a billion-dollar business. This growth would be through both the King Air/Citation programs and through Flight Desk, which connects members with “partner” aircraft to provide travel options.
Dichter believes that, 10 years down the road, the worldwide market for Wheels Up could require 1,000 aircraft.
The company sees growth through not only membership retention—“tracking toward a goal of 90 percent”—but also through attracting new customers into private aviation. About a third of new members come from the ranks of the airlines' customers, opening the door to an “addressable market” of 1 million to 1.5 million people in the business community, Dichter said. That market is both inside and outside the U.S. Wheels Up has been laying the foundation to expand the King Air program to Western Europe and hopes to have the timing firmed by the end of this year or early next year. But first, Wheels Up is expanding Flight Desk to Europe. Flight Desk currently has a run rate of $50 million.