Dubai: You’ve done it – take out the phone, open an app and make a booking for a ride to come and drop to your choice of location. It could be a ride to the home, office, a meeting… or even down to the airport.
Now, a company wants to take the same concept of ride-hailing beyond the airport and up to the skies. That’s right, create an “Uber for the skies…,” is how Ravi Thakran, the Singapore-based Chairman and Managing Partner of GCC Asia Growth Fund.
Let’s be clear – Thakran is not engaging in wishful thinking. One of his entities – Aspirational Consumer Lifestyle Corp. – earlier this month acquired US-based Wheels Up Partners Holdings, whose business model is based on offering seats on any available private jet that’s there in their neighbourhood. The intention – make private jet travel available to more than just the super-rich or corporate clients.
And the rates? In the range of “Business Class plus…”
Wheels Up services include membership programmes, on-demand private flights across all cabin categories, aircraft management, and aircraft sales. It manages the private jet fleet of Delta Air Lines.
In 2020, the company flew more than 150,000 passengers, utilizing its access to over 1,500 owned, managed, and third-party partner aircraft. With its plans to head to the Middle East and Far East hubs, Wheels Up wants to further its fleet of ready-to-fly jets.
Heading to the Middle East
The deal, which values Wheels Up at $2.1 billion and get a listing on NYSE, will see the company expand its reach beyond the US into the Middle East and Asia. But will this concept fly in untested markets?
“During the pandemic, while there were headwinds for the airline industry as such, it actually created a tailwind for private jet aviation,” said Thakran, who in another avatar was the head of Asia operations at the French luxury goods giant LVMH, which is the home of Louis Vuitton, Givenchy and Christian Dior. “In the Middle East itself, private jet flying during 2020 was up 20 per cent plus, while in the US, it was up by 36 per cent. And in many other parts of the world, there was similar double-digit growth.
“There are between 850 to 1,500 private jet aircrafts in the MEA region, but which spend 90-95 per cent of the time on the ground. A 95 per cent utilisation rate is way too low.
“With Wheels Up, we are bringing a new-generation tech platform that will be able to connect aspirational consumers on one side and tens of thousands of private aircraft on the other.”
That’s where the Uber concept comes in.
What Wheels Up is valued at after the latest deal
Take up rates soar
Thakran’s views about COVID-19 and private jet demand are on the ball. Demand shot up immediately after several countries imposed lockdown measures and those who could afford it chose to fly private to get back to wherever they wanted. Corporates flew in or out their key executives as and when they needed, and ensure business continuity. (In the UAE, there were a handful of business houses that chartered private jets to help those who were stranded here a chance to return.)
Now that more fliers have had a taste for private jets, Thakran reckons it will become habit forming. “It was a first-time experience for many – they are not going to go back to commercial flights,” he added. “There’s a McKinsey study that says 90 per cent of those who can afford to fly in private jets have not done so because they feel it’s too costly. Or have concerns about how to go about it.”
This is where the Wheels Up app and systems kick into gear. Tap a few times on the app and the prospective flier gets to have a selection rates and jets to make the ride happen. Much like an Uber…
“When you create a subscription model like Wheels Up, it creates a much faster adoption rate,” said Thakran. “You have the dynamic pricing, which we think it will generate higher adoption rates. The whole process becomes as easy as buying a ticket for the NBA or NFL.”
Outside of the US, Thakran reckons Wheels Up’s best prospects would lie in the UAE and Middle East, as well as in the Far East. The plan is to rope in a partner, preferably one from the UAE.
“In the Middle East, the UAE is the best place to exploit this concept,” he said. “With the new aerospace hub that the UAE is building and the investments that have gone in, I don’t think there’s another region in Asia Pacific that’s putting as much focus into aviation.
“A partnership with a player in the UAE and create a central hub for the region will be a fantastic. There is Saudi Arabia is upping investments in this field – but UAE has the advantages. We will be encouraging Wheels Up to consider an alliance, do a collaboration.”
But to get traction, Thakran and Wheels Up will need to work on mindsets as well. The majority of the private jets in the Middle East are owned by high networth individuals or corporates. “The Middle East has always believed in a full ownership model,” said Thakran. “But if a number of owners of these 850 jets can be convinced to place their aircraft on the Wheels Up platform, their utilisation rates will shoot up.
“If 5 per cent is the actual utilisation rate in the US, it’s even less for private jets in the UAE and Middle East. We could change that. There are way to monetize that time, and it will be great for everyone – provided that jet owners are open to leasing their aircraft.”
That’s what Wheels Up and Thakran will hope to find out… soon.
(This story has been published from Gulf News rss feed, without modifications to the text.)