Fast Five: Managing Charter Opportunities For Owners
A day after unveiling plans to acquire FBO chain Atlantic Aviation for $4.48 billion, New York City-based investment firm KKR on June 8 announced that it is extending a $150 million credit line to Jet Edge International to help grow the business. The financing comes as Jet Edge, based in Van Nuys, California, rolls out a new “AdvantEdge” charter management program aimed at improving the utilization of member-owners’ aircraft. BCA caught up with Jet Edge CEO Bill Papariella that afternoon.
What is the history of Jet Edge? Could you give us a summary?
I purchased Jet Edge in 2011 and started to manage the company, mostly dedicated to Gulfstream [aircraft]. We bought JetSelect in [January] 2020, which was a Challenger fleet. Over a period of 10 years, we have grown the fleet to be the dominant Challenger and Gulfstream operator in the country. From there, we’ve morphed into more of a charter management company, which is focused on planes that want revenue. We do full management, but we don’t do Part 91 management, meaning if don’t want revenue on your plane we’re not necessarily the right shop for you. We require the planes to fly charter. The majority of our planes are owned by private individuals or corporations.
Was KKR one of the original investors? Does the credit facility represent an equity investment by KKR?
We’ve agreed to not disclose the structure of the deal publicly. But KKR are great investors—they’ve figured out a way to get a return on their investment. They were not part of the capital in the background.
The KKR investment comes as Jet Edge is introducing its new AdvantEdge program. Could you describe how AdvantEdge works and what the benefits are for owners?
The main advantage to the program is that it is a predictable and forecastable revenue and expense program. You can buy a plane, put it in our system and have a forecastable product, where you know what you’re getting into and what the costs are going to be. For most people, the predictability and the forecast-ability is paramount. Traditionally, the aircraft management space is ad-hoc, owner-approval, inefficient. There’s really never been any commercialized front-end for an asset-light model. We’re the first one to market with that, and we’ve been doing it for a while. This isn’t new to us—the pandemic gave us tailwind to push it through to more of an institutional program. At this point, that is why you are seeing KKR underwrite the story.
[We’re] focusing on a predictable, forecastable plane-ownership model where someone can pretty much step into their plane and enjoy their experience without it being opaque in any way or unreliable on a return. We’re sort of turning the industry on its head and we’re sort of reversing a fraction in a way. You can buy a brand-new Challenger 350 and fly it all in, with depreciation and amortization and mortgages and everything else for five grand an hour, so why would you pay $16,000 an hour for a fractional when you can do it for a fraction of the cost?
How many owners have signed on to participate in the program, and with which aircraft types?
There are 68 planes in the program. There are Challenger 300s and 350s, 605s and then Gulfstream IV, V and 450—[those] are the predominant jets. We do have some Falcon 2000 and Legacy 650 aircraft that also participate, but we try and stick to the commonality.
Which other growth plans does Jet Edge have?
The growth model is really simple. We’re focused specifically on the AdvantEdge program, our full management program, our Reserve program, our technology. You will see us come out with a substantial app in the fourth [or] third quarter. We’re doing a rebrand now; it’s going to go live any day. We can always find an opportunity here and there maybe, but that’s where you will see us focus over the next two years and I doubt you will see we us veer off the path. That’s a lot of wood to chop as it is, and we need to execute.