Charter’s New World Order

In the relative blink of an eye, a seismic shift has changed the map of the charter world, whose future is now being shaped by a trio of holding entities-cum-access providers: Directional Aviation Capital (DAC), Vista Global Holdings (VGH), and Wheels Up. Who are they, how did things change so quickly, and what does their emergence mean for you? 

The three represent a new kind of provider that aims to use its subsidiaries to deliver a full range of solutions—including per-seat charter, corporate flight department–style lift, and owner-like access to the latest large-cabin jets. All three rely upon proprietary technology platforms to optimize operations and deliver real-time information. Their apparent ambition is to serve as a one-stop shop for business jet travelers—to have the capability and flexibility to provide whatever you need for every flight at every time in your life.

You’ve likely heard these conglomerates’ names before, but unless you’ve followed their recent developments, you may not have noted their aftershocks or the changes they herald. 

Cleveland-based DAC, for example, was founded by chairman Kenn Ricci in 1981, but until this decade its OneSky division, which includes the Flexjet fractional-ownership program and jet-card provider Sentient Jet, didn’t exist. Dubai, UAE–based VGH was launched only recently, in August 2018, by Thomas Flohr, founder and chairman of membership and on-demand charter operator VistaJet, to acquire companies to meet expected long-term global demand for private aircraft access. 

Wheels Up, which debuted in 2013 with a “membership” model—charging a fee for pay-as-you-go access to an aircraft fleet—later added an in-house brokerage and per-seat offering to its benefits, but it seemed to have limited global ambitions until last May. That’s when it purchased light jet charter fleet owner/operator Travel Management Company, aka TMC Jets. “Wheels Up is officially in deal mode,” declared founder and CEO Kenny Dichter (creator of the NetJets Marquis Card).

Meanwhile, VGH has added two U.S.-based companies to its portfolio—XOJet, noted owner/operator of a midsize/super-midsize jet fleet, and per-seat charter pioneer and charter app developer JetSmarter—and has promptly merged the two into XO, a “digital jet marketplace.” And DAC’s OneSky, for its part, has acquired U.K.-based charter broker and app developer PrivateFly, bolstering its online and mobile charter booking capabilities.

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Such developments should soon result in service enhancements and perhaps lower prices. PrivateFly just introduced a $29,000 one-way transcontinental fixed rate aboard Challenger 300s, a price made possible, CEO Adam Twidell says, by synergies with its new siblings. Flohr, explaining VGH’s JetSmarter acquisition, says the latter’s technology would be embedded throughout the group’s companies, immediately improving catering, flight tracking, concierge, and other services.

Among the longer-term implications, if there’s any broad future for per-seat charter, the VGH deal may have saved it, as ownership by Vista Global will provide some breathing room for the shared-cabin concept championed by JetSmarter, which faced financial and PR challenges at the time of its sale.

Not a customer of any of the new Big Three providers? You’ll likely be affected in the long term, anyway. Most charter flights involve companies that manage and operate aircraft—often dozens or even more than a hundred—on behalf of individual owners. Though many offer jet cards or other block-time arrangements in addition to on-demand charter, most of these providers admit they’ve been slow to push their technology forward, often noting that their customers prefer human contact, anyway. But with market competition rather than customer preference driving the pace of adaptation, expect it to accelerate, further pushed by the continuing entry of more tech-savvy customers into the charter arena.

A longer-term conundrum has yet to unfold: all three companies champion an asset-light, shared-economy model, based on the premise that there’s no reason to own an aircraft when you can have access to the same asset without buying it. Indeed, if you wanted, say, Bombardier’s popular new Global 7500, you’d have to wait a couple of years for one from the manufacturer versus a few months for access through VGH, whose deliveries of some 30 orders for the ultra-long-range jet are scheduled to commence soon. (Alone among the three providers, DAC offers an ownership option through OneSky’s Flexjet, which in May unveiled an innovative day-based fractional-ownership program for the Gulfstream G650.) But if the shared-economy trend truly does reduce the need to own, how will aircraft manufacturers stay in business and have the resources to develop platforms for tomorrow’s charter customers?

For years, would-be disruptors have floated plans for converting excess fleet capacity into a more “democratized” charter market. That excess exists because owners are content to let jets sit idle, as Argus data on the higher utilization rates of aircraft in owned-and-operated versus managed fleets attests. But unused capacity begins to disappear in a shared economy. If the airframers sold only as many business jets as capacity demanded, could they stay in business? Or would the greater efficiency wrought by these brave new access models lead to an overcompensating increase in demand for room onboard?

In addition to DAC, VGH, and Wheels Up, some entities dotting the charter landscape have developed their own offerings with either the requisite underpinnings to expand their integrated operating models or the ability to deliver valuable additions to an acquisitive conglomerate, JetSuite, Jet Linx, and PlaneSense among them. As stand-alones or subsidiaries, such providers will likely continue to push charter’s boundaries. And you can’t discount the power of visionary leadership, as exemplified by the captains of these three organizations, in sparking innovations yet unveiled. 

Indeed, don’t be surprised to hear about access options that today seem hard to imagine or too good to be true. Should they materialize, remember one thing that never changes in the charter space: the need for due diligence. The Big Three have backing from investors with good reputations, plus histories of growth and additional signs of success. But like many other providers, they are all privately held, and their financial health is unknown.