“The best way to predict the future is to invent it.” –Alan Kay, American computer scientist
Ken Dichter, chairman, founder and CEO of Wheels Up believes, “The future is now.” The New York company—famous for its fleet of distinctively painted on-demand King Airs and Citations for member travel—is planning to put Kay’s advice to good use. A few prominent indicators are the recent Wheels Up acquisition of TMC, adding 26 light jets to the fleet, and of aviation technology company Avianis. Dichter believes Avianis will eventually create the smartphone app that will allow more customers to not only fly, but to experience the flying lifestyle by easily booking a charter using the Wheels Up as their portal, much the way a number of other new companies have grown their subscriber base.
The Wheels Up strategy is pretty simple. Consider the archaic method people use to hail a city cab, a system that delivers terrible asset utilization because the cab carries a paying passenger no more than 35 percent of the time. The rest is spent looking for the next customer. “Think of the inefficiencies in our [aviation] business now and what technology can do to better that,” Dichter said. Using geo-locating on a smartphone, Uber turned the world on its ear by carrying paying passengers 65 percent of the time. “Amazon, Netflix and Uber–I can’t think of three companies that Wheels Up aspires to be more like,” Dichter said. “Amazon’s original book business took them 10 years to build and helped them create Amazon Prime. The book business at Amazon used to be almost 100% of their revenue. Today it’s 4.3 percent.” Dichter says ‘Wheels Up’s book-like business is operating its King Air fleet. One day the Wheels Up business on King Airs will be 4.3%.”
Dichter believes the potential customer base for Wheels Up is only scratching the surface right now. Private aviation is used by about 100,000 people in the U.S. “If we can execute our [Wheels Up] playbook over the next 24 months,” he said, “it will take care of [our company] over the next 20 years for our stakeholders. We want Wheels Up to be the tip of the spear to get more people involved in aviation.”
With an Uber-like charter app, he figures Wheels Up can Uberize the industry. He’s been watching the consumer marketplace evolve and realizes Uber, Netflix and Amazon have proven it’s possible to grow a consumer base that really didn’t exist before those portals went live. “What we’re creating at Wheels Up will allow us to have a frictionless relationship with customers, airplanes and the charter trips they want.” Once The Wheels Up app is complete, customers will be able to book charter flights not simply on company aircraft, but also on those of other vetted suppliers of aircraft up through heavy jets. In the last six years Wheels Up has gone from being a King Air provider to an aviation-solution provider with plans to expand beyond their traditional member model. “We have 1,250 airplanes vetted and verified for our off-fleet business. We see that number growing by a factor of 5 when we push the technology out,” Dichter said.
With 6,700 memberships already sold and a retention rate of more than 80 percent, Wheels Up is currently a $1.1 billion enterprise. Dichter believes making the current playbook work could take the company to $3 to 5 billion within 5 years. In addition to the Wheels Up app, company chief sales officer Ken Napolitano believes growth will come when the company is opened up to the outside world. That’s why they’ve created new membership tiers like their basic subscription that begins with a $2,995 initiation fee for people not quite ready for the full Wheels Up core membership.
Opening up the membership rolls to basic members means there won’t be any guaranteed aircraft travel, but it’s the first real step in bringing the aviation experience and lifestyle to millions rather than hundreds of thousands. Another step along the way will be when Wheels Up creates a dynamic pricing model for travel during off-peak times that Napolitano says the company’s working on. Customers will benefit from off-peak pricing because “the airlines and Uber and Air B&B,” have proven it works. Stay tuned for updates on Wheels Up’s progress. The marketplace will be watching the company closely.
