Tech-based startups have a recent history of revolutionizing hotel stays and taxi rides, think Airbnb and Uber, and Wheels Up is aiming to do the same for air travel. How exactly do these startups take their industries by storm? For Airbnb and Uber, it involves ignoring regulations on zoning, hotel taxes, insurance, and other things that have traditionally restricted their rivals.
Wheels Up is a private, New-York-based aviation startup, claiming to “significantly reduce the cost of flying privately while providing unparalleled flexibility and service” with its “revolutionary membership model.” Founder Kenny Dichter was recently named the “Kevin Bacon of Entrepreneurship,” because of his long list of contacts in the startup industry. Dichter co-founded Marquis Jets, the prepaid flight card he later sold to Bershire Hathway’s Netjet division, Alphabet City Sports Records, Juice Press, and Tequila Avion. Wheels Up has already generated millions in funding.
Wheels Up currently has just over 2,100 members, who can fly with 24-hour notice on one of the company’s 40 King Air turboprops or 15 Citation Excels/XLS business jets. These members paid a first-time $17,500 membership fee, and pay $8,500 a year to renew their membership.
In early February Wheels Up launched a public charter flight program, marketed as “Hot Flights” and/or “Shared Flights.” Apollo Jets partnered with Wheels Up on the program, which costs $5,950 for a year-long membership. These members will fly on aircrafts that carry less than 30 passengers.
Wheels Up and its partner Apollo Jets are not listed in the Department of Transportation’s Charter Reports, or anywhere on DOT’s website, though many other charters are. Dichter explained that his company is exempt from DOT Regulation 14 CFR 389, because Hot Flights can only be booked or purchased as an entire aircraft, rather than an individual seat. If no more than one customer requests the same Hot Flight, that customer will take the entire aircraft. For Wheels Up’s Shared Flight opportunities, no flights or seats are sold; the members agree to the terms of cost sharing themselves.
The bottom line in how Wheels Up can avoid DOT and FAA, and offer flights at reduced prices, is that Wheels Up does not play an active role in forming travel groups for specific dates, times, or destinations; it only provides members with a platform to form arrangements for shared transportation.
Much like Uber does not actually own the vehicles customers ride in and has not personally trained the drivers, Dichter emphasizes that, “Wheels Up is not an operator for the flights arranged by or through Wheels Up and that FAA-licensed and DOT-registered air carriers exercise full operational control of the aircraft.”
The type of service Wheels Up is offering is literally unchartered territory. Some, like Jeff Wieand of Boston JetSearch, Inc., see nothing wrong with the way Wheels Up operates. Wieand categorizes Wheels Up as a “charter broker who happens to own the aircraft.” Competitors of the travel startup, however, think that the way Wheels Up is operating is probably not legal, and should be investigated further by the DOT.
One anonymous air executive feels the comparison of Wheels Up to Uber isn’t quite accurate. “The FAA and the DOT are a lot tougher than the taxi commission of this or that city. “ On FAA regulations, the executive said, “Part 135 and 380 are there to protect people and when people get out of line in our business it’s not like Airbnb and Uber, where they can just grind the regulators out.”
While the policy around Wheels Up’s practice remains murky and as s result, their future uncertain, the desire for a convenient, cheap air service isn’t likely to fade. For More information contact our airline representative today!
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