August 01, 2013
The founders of Marquis Jet have struck a potential $1.4 billion deal with Beechcraft to launch new “private membership” venture, Wheels Up, which will be anchored around a fleet of the Wichita-based company’s King Airs.
The agreement with Beechcraft—the largest of its kind for a fleet of business turboprops—includes firm orders for 35 King Air 350is, with options for up to 70 more. The deal also includes a comprehensive maintenance and services contract, covering both scheduled and unscheduled visits, as well as labor, parts and consumables.
The potential value for the firm orders alone is in excess of $500 million, with the aircraft accounting for a little more than half of that. Including options, the value of the aircraft is $788 million, while the maintenance services package is valued at $600 million
Delivery of the first nine aircraft will take place by year-end, with the remaining firm orders to be delivered at a rate of 1-1.5 per month, running through 2015. The options would then continue over the next few years.
Wheels Up founder and CEO Kenny Dichter is optimistic that those options will be necessary—and potentially expanded in the future, as membership in Wheels Up expands. Under the concept, Wheels Up will sell memberships at an entrance price of $15,750, with annual renewal fees of $7,250 per year. Flight time would be then charged at straight hourly rates without management or other service fees. With membership, customers will have access to the Wheels Up fleet of King Airs, as well as a range of other aircraft offerings that are expected to range from small aircraft such as Learjets on up to Gulfstreams or other large-cabin business jets. Wheels Up will wholly own its King Air fleet, Dichter says, but plans to form agreements with a set of operators to offer the jet services.
He notes that there is a handful of companies who operate large fleets of business jets, and most—if not all—of them have been in discussions with Wheels Up executives to launch that end of the business.
With the King Airs, Dichter is expecting to operate a regionalized private aviation business, covering approximately 600-700-nm territories. The first batch of King Airs will be based in the Northeast this year, but he expects to expand into the Southwest and Southeast by next year.
Beechcraft’s Wilmington, Del., center will provide services for the initial Northeast fleet.
The Wheels Up service is just one component of the plan. Dichter says the company also wants to establish a Wheels Down service that provides concierge services and “experiences” wrapped around special events, culinary trips, meet-and-greet opportunities and other benefits. “It’s not just about the ramp and tarmac,” he says. “Our service doesn’t stop there.” He noted this was a direction Marquis Jet was just starting to take when they sold the business to NetJets.