I spent some time this week with Kenny Dichter, the founder of Wheels Up, a startup private aviation company that is rolling the dice with a fleet of brand new King Air 350i turboprops. The New York-based firm has taken delivery of its first nine King Airs as part of a massive deal with Beechcraft for 105 airplanes plus maintenance that eventually could be worth $1.4 billion. But surprisingly, Dichter says the deal almost didn’t happen.
Coincidentally, $1.4 billion is also the purchase price Cessna parent company Textron is paying to buy Beechcraft, which emerged from bankruptcy 10 months ago with a renewed focus on propeller airplanes. Before that deal was sealed, the sharks were circling Beechcraft, with one company in particular, Superior Aviation of China, making a play for the storied GA manufacturer.
“I was holding my breath,” Dichter told me of the Chinese deal. “If Superior had bought Beechcraft, I don’t think we would have made the deal for the King Airs. When that deal didn’t happen, we jumped right in with a discussion” with Beechcraft CEO Bill Boisture, who, coincidentally, is the former CEO of NetJets, where Dichter first made his mark in aviation.
Five months after signing the purchase order, Textron announced its buyout of Beechcraft. To say Dichter was pleased to hear that piece of news is an understatement.
“It couldn’t have been any better if I had written the script myself,” he said. “Right across the street from Beechcraft in Wichita, Kansas, is Cessna, owned by Textron, with product lines that are very smooth. Cessna didn’t have the turboprops, and they are the stepping stone into jets. When I saw those two companies coming together, I said, well, everything happens for a reason. It was perfect.”
Dichter, the inventor of the jet card concept with NetJets’ Marquis Jet spin off, was named Vice Chairman of NetJets before making his exit from the company. While waiting for a noncompete agreement to run out, he created a tequila brand called Avion (which will be familiar to fans of the HBO series “Entourage,” where it enjoyed clever product placement) and became an investor in Juice Press, a high-end line of nutrition drinks.
Now that his non-compete has expired, Dichter is hoping to create a whole new kind of private aviation experience that he says slots into the market above air charter and below jet cards. To fund Wheels Up, Dichter eschewed traditional institutional investors and started making calls to former clients, eventually securing more than 300 individual investors who together have put up $70 million. More than half of them have become Wheels Up customers, investing between $100,000 and $3 million each in the company. Eventually these early customers should generate $50 to $100 million of annual flight time, providing a great foundation for the business, Dichter says.
Wheels Up plans to take delivery of 18 more King Airs this year and another 18 next year as it expands from the Northeast into the Southeast and West Coast. Gama Charters is operating the King Airs on behalf of Wheels Up. Dichter’s firm has also singed a deal with Europe’s VistaJet to serve as the North American sales agent for its Bomabardier Globals. I had the chance to check out a Wheels Up King Air 350i and VistaJet Global in a hangar at Morristown Airport in New Jersey, and both are stunning. The King Air interior looks like a bizjet’s, with gorgeous club leather seating, Rockwell Collins Pro Line 21 avionics up front and even a lavatory featuring a hideaway sink.
Wheels Up clients will love the airplanes, and they’ll love the pricing model too. Membership costs $15,750 for the first year and $7,250 a year after that, plus an occupied hourly rate of $3,950. That’s quite a bit more than King Air charter, but with Wheels Up clients aren’t charged for deadhead legs, they have guaranteed availability, they can share seats to save money, and they get to fly on the nicest King Airs on the planet.
Add it all up, and Wheels Up appears well positioned for long-term success.
Get exclusive online content like this delivered straight to your inbox by signing up for our free enewsletter.
We welcome your comments on flyingmag.com. In order to maintain a respectful environment, we ask that all comments be on-topic, respectful and spam-free. All comments made here are public and may be republished by Flying.
