By Richard Newman
The Record (Hackensack, N.J.)
Kenny Dichter of Livingston, the founder of Marquis Jet, where customers pay in advance for on-demand access to charter jet flights, is ramping up a new venture.
He is selling short-haul turboprop service to individuals and corporations, mainly in the Northeast, who don’t want to pay the hefty price of a private jet fractional share ownership or charter arrangement.
The concept behind Dichter’s newest enterprise, Wheels Up, is similar to Marquis Jet, which was acquired three years ago by Berkshire Hathaway’s NetJets Inc. for an undisclosed sum.
Customers pay fees in advance to gain access to aircraft throughout the year, plus hourly in-flight rates.
Dichter expects the Super Bowl, to be played Feb. 2 at MetLife Stadium in East Rutherford, to provide Wheels Up with a mid-winter boost in sales and he has already taken some reservations for flights to the game.
“Most of the bookings will happen after it is determined who is playing,” he said.
Either the San Francisco 49ers or Seattle Seahawks will be representing the National Football Conference, and those cities are outside the turboprops’ range.
However, Dichter said he will be able to accommodate West Coast fans by booking them with a marketing alliance partner, VistaJet, which has a fleet of large-cabin, long-range jets. Denver, represented by the Broncos, also is outside the turboprop range, and would represent the American Football Conference if it defeats the New England Patriots this weekend.
Wheels Up is throwing a Super Saturday party on Feb. 1 for its members and their guests at The General, a restaurant on the Bowery to be hosted by Billy Bush of the entertainment news show “Access Hollywood.”
The guest list includes New York Giants offensive tackle David Diehl, New York Jets center Nick Mangold and Houston Texans linebacker and Bergen Catholic graduate Brian Cushing.
“We are expecting 700 to 800 people,” said Dichter, who has marketing experience.
He, along with partner Jesse Itzler, sold his first company, a sports marketing agency called Alphabet City, to SFX Entertainment in 1998 for $10 million.
The concept behind Dichter’s Wheels Up is similar to Marquis Jet.
Customers pay fees in advance to get access to aircraft throughout the year, plus hourly in-flight rates.
Membership costs $15,750, and the annual dues, beginning in the second year, are $7,250.
The hourly rate of $3,950 is “about 40 percent less than the Marquis Jet entry level, which is approaching $7,000 an hour,” Dichter said.
Wheels Up is a cheaper alternative to Marquis Jet, but the aircraft have less range.
Dichter believes there is a niche to be exploited by making private, regional travel, at 350 miles per hour and “above the weather” at up to 35,000 feet, available to frequent fliers fed up with congested commercial airports and crowded planes.
“The typical customer is going to fly between 10 and 100 hours a year,” Dichter said in an interview this week at Morristown Municipal Airport. “The average flight is probably around two hours.”
Unlike Marquis Jet, whose customers used the NetJets fleet under a marketing agreement, Wheels Up has its own planes.
Dichter raised $65 million from about 300 equity investors and, with help from company President David Baxt, former global head of Jeffries Aerospace & Defense Investment Banking Group, got a $100 million credit facility from Jeffries in November to secure an aircraft deal with Wichita, Kan., manufacturer Beechcraft Corp.
The New York City-based upstart has 35 eight-passenger Beechcraft King Air aircraft on order with options to buy 70 more, in what is potentially a $1.4 billion agreement, factory maintenance agreements included.
So far, Wheels Up has received nine aircraft and expects to take delivery on another 18 this year.
Wheels Up, which so far has about 200 members, doesn’t have a single base for the fleet. “We move planes around to where the members need them,” a spokesman said in an email. “In the N.Y.C. area, Wheels Up typically uses Morristown, Teterboro, White Plains, etc.”
Equity stakeholders in the venture include Seattle Seahawks quarterback Russell Wilson, Home Depot co-founder Kenneth Langone and former Los Angeles Dodgers owner Frank McCourt.
Wheels Up can also offer long-haul service to Europe, Asia and the West Coast, Dichter said.
VistaJet, a Swiss airline holding company, will base a dozen new, long-range Bombardier jets in the United States in March to be operated by Jet Aviation Flight Services, with Wheels Up acting as exclusive sales agent.
Wheels Up’s fleet of turboprops is operated by Gama Charters Inc., which has its U.S. headquarters in Stratford, Conn.
The timing may be just right, says aviation analyst Brian Foley of Sparta in Sussex County.
“Kenny and others are in a good position for the next few years, and he’s done this before,” Foley said.
The U.S. private aviation market has been slowly recovering along with the economy, and “is moving in the right direction,” Foley said.
Business jet take-offs and landings declined by about 40 percent between a 2007 peak and a 2009 trough, he said, citing Federal Aviation Administration statistics.
“It’s been creeping up and is now about 15 percent below the 2007 peak,” he said.
Private aviation spending is “very discretionary” and tends to move in line with the economy, Foley said. “Things are turning around with [stock market indices] setting records, and the airlines continue to make it a miserable experience to get from ‘A’ to ‘B,’Ÿ” he said.