KKR is again investing in Jet Edge International, and the operator is again expanding its fleet, using $75 million from credit funds and accounts managed by the private equity firm. The monies will bring onboard 20 additional super mid and large-cabin aircraft. Before adding 27 similar jets in the second half of 2021, Jet Edge was the eighth-largest private jet operator in the U.S., based on fractional and charter flight hours.
Today’s announcement brings KKR’s investment in Jet Edge to $265 million. Last year it spent $4.5 billion to acquire Atlantic Aviation, a chain of private jet terminals. Atlantic has since expanded via a merger with another FBO group, Ross Aviation, in November.
Patrick Clancy, a Director at KKR, said, “In a challenging environment, the Jet Edge team are executing on their strategy and have delivered impressive growth for the business in 2021 while maintaining a disciplined operating platform that puts their customers first. We are excited to increase our investment in order to further support the growth of Jet Edge’s fleet as they continue to expand their innovative Reserve membership and AdvantEdge product lines.”
Jet Edge, which moved its headquarters from California to Columbus, Ohio, after acquiring JetSelect in 2020, has been marketing AdvantEdge as an alternative to the fractional ownership programs sold by NetJets and Flexjet, the two largest players in the space. All three are based in the Buckeye State. The headquarters buildings for NetJets and Jet Edge are less than five miles apart, and lately, competitive sparks have been flying.
In December, Jet Edge took two billboards across from the private terminals NetJets and Flexjet use at Van Nuys Airport, which serves Los Angeles-based flyers. A week later, in an email to customers, NetJets wrote, “Because most of our competitors don’t have our level of financial security, some are dropping their rates or creating new incentives to generate short-term cash despite short industry supply and record demand.”
The billboards promoted fixed prices from California to the East Coast and Hawaii. Jet Edge launched a promotion offering members who deposited $500,000 into its Reserve jet card program 7.5% of flight credits in early November.
“With KKR support, Jet Edge has grown the Reserve Membership program to record numbers,” according to Jet Edge International CEO Bill Papariella.
Papariella, who worked for NetJets after it acquired Marquis Jet Partners in 2010, added, “KKR’s most recent investment in Jet Edge speaks to its confidence in our mission to deliver scaled private aviation solutions with industry-leading service and new capital to support those efforts with continued fleet growth.”
While NetJets put sales of its jet cards on hiatus back in August as demand surged to record levels, in early November, Jet Edge said it had tallied over $100 million of deposits since launching Reserve early in 2021.
In its email, the unit of Berkshire Hathaway said it hopes to begin selling its entire lineup of products, including jet cards, by the second quarter. Jet Edge expects to build its super mid and large cabin fleet to about 95 aircraft by that time.
NetJets, late last year, took delivery of its first ultra-long-range Bombardier Global 7500. As of November, it had 57 Global and Gulfstream long-range jets and another 42 Challenger 650 and Falcon 2000EX large-cabin aircraft. It also had 83 Challenger 350 super-midsize jets. It is adding over 120 new airplanes during 2021 and 2022.
Flexjet is also growing, expecting to add at least four aircraft per month through the end of 2022, a pace that would see its fleet increase by 40% to around 230 aircraft.
Vista Global, which owns or has an interest in VistaJet, XOJet, Red Wing Aviation, Talon Air, and brokers XO Global and Apollo jets, said last year it would grow its light and midsize jet fleet from less than 15 aircraft to over 50 by the end of this year. At the same time, it is taking delivery of 23 new Global 7500s and Challenger 350s from Bombardier.
To date, Jet Edge has been growing by acquiring used aircraft, refurbishing them, and including adding high-speed internet. In October, it was announced as the launch customer for Gogo 5G. According to the company, the 20 additional aircraft are in the process of being onboarded.
More merger activity looks likely. Elevate Holdings, parent of Private Jet Services Group, a broker specializing in sports teams and live entertainment charters; last week said it had acquired Keystone Aviation, adding 13 charter aircraft to its fleet. It called the acquisition “the first of many.” It is targeting smaller operators for consolidation.
As of last June, figures from Argus TraqPak showed the 30 largest operators measured by fractional and charter flight hours together held just under 30% of the total private flight market, with NetJets controlling a dominant 11% share.
The overall market is split between the fractional and charter flights on one side and the private market, non-commercial flights for the owners of their aircraft, on the other. However, that ratio has been shifting over the past decade to charter and fractional operators. In 2012, charter and fractional flight hours accounted for 43.8% of the market. As of last June it stood at 54.4%. With big charter and fractional operators grabbing both new and used jets to use for their jet card and fractional customers, the trend looks likely to continue, even as owners now fly their own aircraft more frequently.