The private aviation company, Wheels Up, recently raised a further $128 million in funding. It has already acquired Avianis Systems, a private aviation technology company. And has plans to expand its platform and accelerate membership growth through further investment in sales and marketing.
The recent Class D equity capital raise of $128 million was led by new investor Franklin Templeton. Current investors T. Rowe Price and Fidelity Management & Research, along with other institutional and private investors, were also in this funding round. The Company's post-money enterprise valuation is north of $1.1 billion.
"The continued support from our existing investors and the strong interest from new institutions in our latest investment round reinforce the dominance that Wheels Up continues to exhibit as an innovative disruptor and leading force in the private aviation and technology industries," said Wheels Up Founder and CEO Kenny Dichter.
Avianis Systems Acquisition
Shortly after the funding, Wheels Up bought Avianis which provides an advanced Flight Management System ("FMS") for private aircraft owners, operators, management companies, charter brokers, and flight departments.
Wheels Up says it is making significant investments in technology to help private aircraft operators digitize and streamline their services. This will allow operators to benefit from tools that simplify and speed up task completion via post-booking automation; calculate real-time pricing, feasibility, and availability; and create new revenue streams through access to additional flight demand at scale. Avianis will continue to offer its FMS as a stand-alone solution to its existing and future customers.
Dan Crowe, CIO & EVP-Digital for Wheels Up, also noted, "The talented team at Avianis will be a formidable addition to our expanding organization as we build out the most advanced digital platform in private aviation. Avianis will further help us tech-enable operators in the running of their businesses."
Daniel Tharp, Founder and Managing Director of Avianis, added, "By joining Kenny and the Wheels Up team, we're thrilled to become part of such a powerful brand and company. We quickly recognized that the combination of our assets and teams would allow us to accelerate the development of the Avianis FMS and unlock enormous value and opportunity in an industry that is ripe for positive disruption."
Wheels Up says the acquisition will help to accelerate the development of its next-level platform, including its digital charter marketplace. This marketplace connects a real-time supply of vetted and verified aircraft to the flight demands of over 6,000 Wheels Up members across North America. These members are able to instantly look, book, and fly through the Wheels Up App.
The company has its own fleet of 119 aircraft including King Air turboprops and Citation Excel/XLS light jets and more recently added Hawker 400XPs through its acquisition of TMC earlier this year.
At this year’s NBAA conference Kenny Dichter noted that the current mix of usage by members is about 80% own fleet to 20% off fleet (ie through the charter marketplace), but in 3-4 years he expects this to flip to be 80% off fleet and 20% own fleet. He expanded on this by saying that members are currently doing about $100m run rate for off fleet flights and the vision is to grow this portion to $1bn over the next 3-5 years.
During his NBAA presentation Dichter made several comparisons to other technology platform companies, noting that in the taxi business yellow cabs have a customer about 35% of the time and are empty the other 65% of the time. But, he said with Uber and Lyft these metrics flip around, so that cars have customers in them 65% of the time. He feels that Wheels Up can achieve similar transformations in the private aviation space.
As another platform comparison Dichter noted that Amazon Prime members pay for guaranteed delivery. The parallel with Wheels Up is that “members receive guaranteed access, to our fleet” and he said the company is seeing member retention rates of about 85%, with higher retention rates for members who fly more.
The new Connect membership, which provides access to the marketplace, shared flights and empty legs is driving a lot of the recent growth, “we will sell over 100 of these this month” said Dichter. CFO Eric Jacobs added “we have seen lots of folks joining the lower tier membership, which supports the idea of sharing.”
Looking to the future Dichter said “the next tier of membership will be a free tier” and noted that non-members will have flights that are dynamically priced. He added “private aviation has about 100,00 participants today – we think we can bring private aviation to millions.”