Wheels Up CEO on the company going public and his outlook for the aviation sector

Kenny Dichter, Wheels Up CEO joined Yahoo Finance Live to discuss the company going public and his outlook for the aviation sector.

Video transcript

ADAM SHAPIRO: All right, welcome back to Yahoo Finance Live. We want to bring back in to the screen the CEO from Wheels Up, Kenny Dichter, because the company now publicly traded. But more important-- I'm going to give you 2 million reasons why you might want to consider Wheels Up. 2 million is the number of people passing through TSA on any given day now at the nation's airports. And what Wheels Up does is it gives you a chance to avoid all of that hassle. So congratulations. How is the business doing as you go forward?

KENNY DICHTER: First off, it's incredible to be here at the New York Stock Exchange, ringing the bell on the closing bell, being the first private aviation company on a major exchange and to be ringing the bell on behalf of Wheels Up and behalf of our industry. It's been amazing.

As far as the 2 million people through TSA, it's great news for our partners at Delta Airlines. They're our largest shareholder. Ed Bastian and I did a deal about 18 months ago that brought Delta private jets into the Wheels Up family. And we're here to serve Delta first class, business class, and business customers, along with anybody that's looking to fly privately. That's people in businesses, and there's millions of them out there that can do it.

SEANA SMITH: Kenny, I guess, to what extent-- or did COVID-- is it fair to say that COVID did accelerate your business to a certain extent?

KENNY DICHTER: Well, the first quarter really tells the story. We were up 68% in revenue, 50%-- 56% in new member growth. And the business has been really, really firm. I think the first 30, 45 days of COVID, going back to March 2020, that was locked down. Our pilots stayed in position. We stayed in position for our members. And as the rules loosened a bit, but more important, as people had to do essential travel, they needed to move around to see family, Wheels Up was in position. And, you know, business has been very firm.

ADAM SHAPIRO: And what will it look like, though, post-pandemic once this really is truly behind us? Because one of the benefits of Wheels Up is you have all of these, I mean, 1,500-- it's perhaps even more now-- private aircraft that the business traveler or even perhaps the more affluent member who wants to avoid the hassles of the airport. But what does it look like after COVID?

KENNY DICHTER: Well, it's very simple. We're trying to create and we're in motion on creating a two-sided digital marketplace. Think Uber of the sky. Think Airbnb-izing or Amazon-izing your business. We've hired some great people-- Greg Greeley, who was one of the creators of Amazon Prime, as the chairman of our marketplace. And Vinaya Hegde, our digital quarterback, came over in the crisis. And they're doing a great job.

Ultimately, it's going to be as easy as hitting three buttons. You know, it should be as easy as ordering a pizza or ordering an Uber to get a private jet. And again, as you get utility and efficiency on the assets in our space and you ramp that up, you get more people involved. More people equals better pricing. Technology also allows you to do a by the seat business and a shared business. So we think we can take the addressable market from a couple of 100,000 people and businesses that are operating in our space today to millions of people.

SEANA SMITH: Kenny, what does the retention rate look like? Because I remember in the past when we've talked, the retention rate is extremely high. Is that still the case?

KENNY DICHTER: We've got a great retention rate story. For folks that spend $25,000 or more in a year that are Wheels Up members were about 90%. As you go up in usage, 50,000, 75,000, 100,000 and up, the retention rate actually goes up there. So we're working on segmenting our product so that we don't just have membership product, but we have ways that you can become a customer of Wheels Up on-demand style.

Think Spotify free and Spotify paid. And that's really going to open up our ecosystem. A lot of the members that are using us or will be using us on a non-member basis, we believe that the membership proposition is so strong that, like Amazon Prime, everybody will be a Wheels Up member.

ADAM SHAPIRO: Do you think that there could be a time when, you know, the person who doesn't have the $25,000 to spend, but on a buy, use basis, could be getting on board a Wheels Up shared aircraft at some point for a couple hundred bucks?

KENNY DICHTER: Yeah, that's actually a great point that we have in our space, there's about 35% or 40% of the flights in our space are empty. Wheels Up sells them as hot flights today for about $300 for the whole plane. You just have to be flexible and willing to fly when we have an empty. But again, it's 35% or 40% of the time. I think when you get into the deep addressable market, it's when you do what you just mentioned-- buy the seat. We put up a shuttle. You buy a seat from New York or Boston to Nantucket for less than $1,000. So think first class. Think business class pricing on a private airplane, $600, $700 per seat.

SEANA SMITH: Kenny, you also announced a couple of new partnerships-- Porsche, American Express. What do these partnerships do for your brand and for your business, not only in the short term, but more so, in the longer term?

KENNY DICHTER: Yeah, well, when I think about brands like Delta partnering with us and American Express, we're the exclusive partner of their Platinum Program. We have great benefits. For Centurion, you think about Porsche. Just the validation and the number of people that they have in their ecosystem, you know, if they can extend a benefit like a private jet company that Wheels Up has to offer and visa verse, if we can do special things like we do with Delta, you put 100,000 down on Wheels Up, you get diamond status, which is a very, very special status on Delta. So I think that there's-- I want to say, sky's the limit with the partnerships that we can do with folks like AmEx and Delta and Porsche.

ADAM SHAPIRO: Kenny Dichter, Wheels Up CEO, continued success. Congratulations on becoming a public company.