ET: How big is the market?
KD: At Marquis Jet we had a target of 200,000 to 250,000 individuals and businesses. Wheels Up has between 500,000 and a million.
ET: Why the difference?
KD: With Wheels Up we can enter into a conversation people who have to have $1 million to $2 million of liquidity whereas Marquis Jet it was $10 million and up.
ET: And what about pricing?
KD: We’re requiring a nominal initiation of $15,750. Your annual dues, which kick in a year after you join, are $7,250. When you join you have the right to book right away. It’s like a golf club. You join and you can play.
ET: So how much does it cost to play in the case of Wheels Up?
KD: For our King Air 350i it is $3,950 per occupied hour and for the Citation Excel/XLS it’s $6,950 per occupied hour.
ET: You are about to celebrate your one-year anniversary. Where are you in membership and fleet?
KD: Currently we have 550 members, and we will finish the year at 1,200. We are the fastest growing private aviation company in the world. Currently we are flying 20 King Air 350is and 4 Citation Excels/XLS. By end of the year it will be 27 and 10.
ET: How does it work if you are a member?
KD: You can reserve 24 hours in advance. There is no minimum or maximum number flights you have to take or you can take. We have a program for corporations. We have programs where you can buy time in 10, 25, 50 and 100 hour blocks or you can put down $100,000, $200,000 or $400,000 on an account you can draw on. You can buy by hours or by specific airplane. You can get different rules such as shorter booking times and less peak days. It’s the most flexible program in the market.
ET: What’s the growth opportunity?
KD: The goal is to have 10,000 members by 2020 and to have those 10,000 members averaging about 25 hours each. If we achieve that we’ll have a billion dollar business.
ET: What’s the profile of your target customer.
KD: It’s a person who has a vacation home or two that he or she wants to get to. It’s a businessman who wants to have meetings in two or three different states in a single day and get home for dinner. My stock quote is CEOs like us and CFOs love us. It’s perfect for companies that have an eye on the bottom line.
ET: With the King Air are you targeting a regional customer?
KD: It’s a three-hour airplane. Think New York to Chicago, Los Angeles to San Francisco or Los Cabos, Chicago to Dallas, Boston to Toronto, Atlanta to the Bahamas.
ET: With the King Air aren’t you giving up some speed?
KD: If you are over an hour you give up six minutes. When your flight time is more than two hours you’re giving up six minutes an hour. When you fly from New York to Boston you give up nothing because of the up and the down. When you are flying the King versus a larger jet it’s not what you’re losing, it’s what you’re saving.
ET: What’s your take on the first year?
KD: I am pleasantly surprised the King Air has been adopted so quickly. The design and the updated feature of the 350i fleet and the built-ins are impressive.
ET: What percentage of members were flying privately before joining?
KD: Better than 50 percent of our initial membership are seasoned private fliers. The other part is people who have chartered, been passengers but typically fly commercially first class.
ET: At Marquis Jet you had a package of events and special offers on everything from jewelry to high-end Italian men’s suits. Any plans to have similar offerings?
KD: Our Wheels Down program is going to take what we built at Marquis Jet and NetJets and take it to another level. The full launch will be fourth quarter.
ET: Tell us about the ownership?
KD: We raised $73.5 million in equity from over 350 people and Jefferies has arranged hundreds of millions of dollars in credit enabling us to purchase the aircraft. We ordered 105 King Air plus services. It was $1.4 billion, the largest turboprop order in history.
ET: Will we be seeing Wheels Up in Europe?
KD: We have an exclusive with Textron for the 350i in western Europe. Towards the end of 2015 you will see the launch of Wheels Up in Europe.
ET: What about Asia?
KD: I am not focused on it.