Wheels Up’s link with Costco may be the most far-reaching effort yet to attract a new wave of business aircraft users. Dave Higdon explores…
From the beginning, participants in Business Aviation have chosen the operating option that best fits their needs and finances.
Whole aircraft ownership dominated as the cleanest and most beneficial of the options from a tax perspective. The government took a broad, largely successful swing, driving new business dating back to the 1960s with the investment tax credit (ITC).
In the 1970s the ITC helped develop artificially high volumes of sales of barges, rail cars, airplanes and other hard goods. When it ended in 1986 one of the prevailing incentives to buy an aircraft vanished.
The Invention of Fractional Ownership
Back in 1964, a little Ohio-based company, Executive Jet Aviation started under the leadership of a retired Air Force officer, Paul W. Tibbets, Jr. At about the time the ITC ended, in 1987, EJA spawned NetJets (history's first fractional aircraft-ownership company).
Aimed at moving some unsold business jets, NetJets' concept drew significant push back, even ridicule from many in the business of selling jets. Among the common criticisms, “People are going to want to know it's their airplane flying them.”
Nevertheless, NetJets attracted new blood to Business Aviation, and now, thirty years later the continued success of NetJets – now a Berkshire Hathaway company – speaks for itself.
Now for Something New(er)...
Next came pre-paid jet charter cards, such as Marquis Jet Card. Marquis did well enough to be bought out, allowing its founder to go a step further. That man was Kenny Dichter, founder, CEO and brain trust of Wheels Up.
Since starting in 2013 Wheels Up has amassed a fleet of nearly 85 Beech King Air 350i turboprops, Cessna Citation XLS and Citation X jets. Membership exceeds 4,000. Dichter forecasts 75,000 members using 1,000 King Airs by 2030.
According to Dichter, between 30% and 35% of new members come to Wheels Up's from the airlines.
Adding to the company's visibility, Costco, the giant warehouse store, now sells Wheels Up memberships to its customers, and this Costco link may be the most far-reaching effort yet to attract a new wave of business aircraft users from ‘outside the choir.’
For a $15,000 membership fee, the Costco.com members get a Wheels Up membership, plus a $3,500 Costco Cash Card – and $5,000 in flight credit to start the year.
So far there’s no sign of a King Air or Citation XLS parked outside Wichita's sole Costco store, but they're still building those King Airs right across the fence separating the Costco store from the Textron Aviation factory. It’s a small world, eh?
We can always use more ways to attract new people to aviation.