Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. You're listening to Bloomberg
Speaker 1: Business Week with Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 1: Our Bloomberg Intelligence team out with a note today. It
Speaker 1: reminds us that private aviation. We know this boomed during
Speaker 1: the pandemic, yet it could ebb with slowing economies and
Speaker 1: higher fuel prices due to the Iran War. It's a
Speaker 1: trend that could disrupt business plans for charter in fractional
Speaker 1: operators and prompt some to shrink or exit the market.
Speaker 1: I'm curious. Valan Walsh can tell us more. He's president
Speaker 1: of Sentient Jet. It's known for the Jet card. It
Speaker 1: offers customers a fixed number of hours of private jet travel.
Speaker 1: He joins us from Quincy, Massachusetts. Alan, welcome, it's good
Speaker 1: to have you here. I do want to start there
Speaker 1: with that note that we got from the team earlier today.
Speaker 1: How are higher fuel prices due to the Iran War
Speaker 1: affecting your business?
Speaker 2: Hey, First, Carl, Tim, thanks for having me. I really
Speaker 2: appreciate good to see you again from Marsa, being here
Speaker 2: for over twenty five years and sixty seven hundred card
Speaker 2: owners in our community. It's something from our specialists we
Speaker 2: constantly look at as well. So overall fuel I'm going
Speaker 2: to say right now, not really having material impact.
Speaker 1: And are you just passing are you passing on the
Speaker 1: additional cost in the form of fuel search artists exactly.
Speaker 2: So we look at that on a monthly basis, and
Speaker 2: as I said, for us, it's just a straight pass through.
Speaker 2: It's not something that we look at.
Speaker 1: But it's not leading to demand destruction.
Speaker 2: It's not. It's not if I actually look at him.
Speaker 2: In April of this year, private aviation flying in North
Speaker 2: A market is actually up eleven percent year over year
Speaker 2: and globally five percent year over year. So yeah, not
Speaker 2: right now, not having an impact.
Speaker 1: You think it's up because last year during April was
Speaker 1: the tariff meltdown in the equity market. And I know
Speaker 1: this is so tied to the equity markets because if
Speaker 1: people feel, you know, they look at a statement, they
Speaker 1: feel incredibly wealthy, they say, okay, I could justify you know,
Speaker 1: a couple hours on the private jet here rather than
Speaker 1: flying economy.
Speaker 2: Yeah, you know, there's always external factors. For sure, that
Speaker 2: would have been one. I mean, obviously what we're seeing
Speaker 2: right now in the Middle East is another one, and
Speaker 2: then they're not going to impact the commercial flying. You know,
Speaker 2: tongue in cheek comment is commercial flying right now is
Speaker 2: probably the best advert for private aviation because it does
Speaker 2: become that reliable alternative for sure. Whateverything that we're seeing,
Speaker 2: you know, people basically people are buying and manipulating their
Speaker 2: time by using private aviation. So certainly is that you know,
Speaker 2: there's cyclical factors right now, this is one.
Speaker 3: Yeah, So who's all flying? You know, remind us about
Speaker 3: your demographic and kind of if those trends remain consistent.
Speaker 2: Yeah, so, thanks Carl. So we have fifty seven hundred
Speaker 2: card owners within our community, and the demographic ranges right
Speaker 2: now from obviously personal travel, personal aviation right down to
Speaker 2: some corporate travel. And the changes that you mentioned we're
Speaker 2: seeing too, I think kind of demographic changes, which is
Speaker 2: getting younger certainly into kind of like mid to late forties.
Speaker 2: But secondarily the other change that we're seeing as well
Speaker 2: is multi generational family trips. You know, I think post COVID,
Speaker 2: what we certainly saw as people doing that revenge travel
Speaker 2: aspect of it kind of hasn't slowed down in that
Speaker 2: regard the experiential part of it is certainly top of
Speaker 2: mind for folks now, and you know, we see it
Speaker 2: manifest especially during the seasons, the seasonality and the peak
Speaker 2: travel seasons through you know, I said, multi generation, bigger,
Speaker 2: further travel.
Speaker 1: Can you remind everybody about the relationship that you have
Speaker 1: with Flexjet and you know, the parent company, Directional Aviation Capital,
Speaker 1: like just how that structure works and if you're using
Speaker 1: each other's aircraft.
Speaker 2: Sure, thanks, so, yes, we are part of the Directional
Speaker 2: Aviation family. I wouldn't say we very defined swim lanes though,
Speaker 2: that we don't cross over on. You know, sister company
Speaker 2: FX here is very firmly rooted in the chart market,
Speaker 2: Sentient very much in the jet card market, where we
Speaker 2: have our own operator network that we stringently and rigorously
Speaker 2: controlled for our safety program. We probably use about thirty
Speaker 2: five percent of the available network of operators across the US,
Speaker 2: whereas Flex obviously very much in his own swim land
Speaker 2: with its own assets that are fully focused on the
Speaker 2: fractional release business.
Speaker 1: So you wouldn't would you ever use Flex's assets.
Speaker 2: You know, not necessarily because.
Speaker 1: It's because those jets are owned by the Flexjet customers right.
Speaker 2: That is correct, I said, you know, it's so different,
Speaker 2: different brands within the global brand.
Speaker 1: So it comes came on my radar last year because
Speaker 1: El Cadderton, the private equity firm back by Bernard Arnaud,
Speaker 1: the French billionaire, led an eight hundred million dollar equity
Speaker 1: investment in flex jet. You don't see any of that money.
Speaker 1: That's a completely separate business.
Speaker 2: It is a completely separate business. And I think there's
Speaker 2: a much longer you know, term strategy there with the
Speaker 2: flexbit flex jet business, I should say. So, you know,
Speaker 2: from assension side, even though we're part of the same family,
Speaker 2: I think that's firmly rooted in the flex jet space,
Speaker 2: you know, and we'll see that manages over the next
Speaker 2: couple of years.
Speaker 3: What's the benefit of having them all, you know, as
Speaker 3: invest you know, as directional as investors investing in all
Speaker 3: these different properties. What's the advantage that you get being
Speaker 3: under this umbrella.
Speaker 2: So that's a really good question. So I think from
Speaker 2: her side, Carl, it's like this. You know, when we
Speaker 2: come across any type of a prospect into the private
Speaker 2: aviation world, part of our role is being consultative, and
Speaker 2: you know, entry into that is we'll have that conversation
Speaker 2: around you know, what's the problem you're trying to fix,
Speaker 2: what's the solution, what's the right solution for you? And
Speaker 2: what we'll do is work on a solution with you.
Speaker 2: So in some cases it could be fractional, some cases
Speaker 2: it's check cards, some cases it could be charter for
Speaker 2: us coming together as the global brands. What it really
Speaker 2: lows is we have the right solution for you, and
Speaker 2: as your needs over time scale up or scale down
Speaker 2: depending on your personal business situations. You can move within
Speaker 2: the family for it. So it certainly provides it the
Speaker 2: one stop shop. That's really advantageous because no, we know
Speaker 2: each other's brands pretty intimately, and were you guys in
Speaker 2: the right direction?
Speaker 3: No? In fighting? You know how that is, you know,
Speaker 3: wanting to be the favorite child.
Speaker 2: Yeah, healthy coopetition, that's probably the best way to say it, right,
Speaker 2: there's always the shore. I think there's some healthy competition.
Speaker 2: But ultimately, do you know what, it makes us all
Speaker 2: better because we learned from what each other is doing.
Speaker 2: But yeah, of course, I mean we'll be interfew're in
Speaker 2: somewhat competitive rate.
Speaker 1: Allan. It's a special aviation day for us because a
Speaker 1: couple of hours ago, we spoke with George Mattson over
Speaker 1: a wheels Up, the CEO of the company, and I'm
Speaker 1: breaking like a cardinal rule here, I'm asking you to
Speaker 1: weigh in on a competitor. But you knows it. Wheels
Speaker 1: Up is a public traded company and has been for
Speaker 1: some time, and the stock has just gotten hammered, and
Speaker 1: the company has had its share of challenges which have
Speaker 1: been publicly documented, and it's in the midst of a
Speaker 1: turnaround right now. Just from a strategy perspective, I'm curious
Speaker 1: about your view, why why that strategy hasn't necessarily worked out.
Speaker 2: Yeah, that's a great comment, you know. For me, I'd
Speaker 2: look at that with him, and I just say, the
Speaker 2: way the way they're warned their businesses is certainly you know,
Speaker 2: it's it's it works for wheels Up. You know that
Speaker 2: they're doing what they need to do. I think ours
Speaker 2: when we when we look at it is really coming
Speaker 2: from very much a position of financial strength across the brands,
Speaker 2: which is which is very deliberate. So you know, I
Speaker 2: think George, they're working through their plan, We're working through
Speaker 2: our plan. Uh, you know, And that was just probably
Speaker 2: the greatest.
Speaker 1: How do you see that, how do you see sort
Speaker 1: of the value proposition that you offer customers And to
Speaker 1: borrow a phrase that you used earlier, like your swim
Speaker 1: lane versus their swim lane and sort of where they
Speaker 1: overlap and where they don't overlap, because at the end
Speaker 1: of the day, I think it's fair to say you
Speaker 1: are going after similar demographic.
Speaker 2: We are, we are, I know, as you know, our
Speaker 2: swim Lane is really looking at the reliability, the consistency,
Speaker 2: the guarantee of ail ability. You know, when we look
Speaker 2: at what we're doing is our own dependability. You know,
Speaker 2: we we We've consistently delivered that for over twenty five years.
Speaker 2: That's why we've got such a high loyalty. You know
Speaker 2: within our cardolder community, they know what we're going to deliver.
Speaker 2: We're there for them twenty four hours a day from
Speaker 2: a service standpoint and an experience standpoint. But really what
Speaker 2: we're giving them is that reliability and the confidence that
Speaker 2: we're there.
Speaker 1: We're speaking with Alan Walsh, president of Sentient jat joining
Speaker 1: us from Quincy, Massachusetts.
Speaker 3: Well, you know, it's interesting just going back to you know,
Speaker 3: Tim saying Okay, we don't like to ask you about
Speaker 3: a competitor, we just head on. But having said that,
Speaker 3: you know they've been doing some capital raises. Is also
Speaker 3: being part of this larger company that when you do
Speaker 3: need capital it's easier to access.
Speaker 2: Well, yeah, I mean if you look at the financial position,
Speaker 2: I think of the Directional Aviation Group, it's been in
Speaker 2: a very very very strong and healthy financial situation forever.
Speaker 2: You know, there's never been that time where there's been
Speaker 2: that type of a constraint. I think if you look
Speaker 2: at the overall strategy on a CARL, you know, it's
Speaker 2: it's really based on that is what's going to work,
Speaker 2: what's best, how do we optimize it, but also take
Speaker 2: advantage of, you know, the confidence of of the financial situation.
Speaker 2: The company is run strategically on that. It's worked on
Speaker 2: making sure that we hit our financial targets. It's made
Speaker 2: hit we're exceed our financial targets, and never really compromise
Speaker 2: it in any way.
Speaker 3: One thing I'm curious about, and just talking with our
Speaker 3: George Ferguson, who covers all the majors and the aerospace
Speaker 3: sector overall, and it's a story we've talked about Alan.
Speaker 3: I feel like over the last couple of years, shortage
Speaker 3: of pilots. Can you guys get all the pilots.
Speaker 2: That you need? Yes? I mean if when I look
Speaker 2: at again, so the way we work in this Carl,
Speaker 2: we have an operator network that we do business with,
Speaker 2: you know, the pilot you know we have I suppose
Speaker 2: contracts with them. They will actually go and source all
Speaker 2: of the pilots. It's not been a challenge. I mean,
Speaker 2: certainly we have people that move back and forth between
Speaker 2: the airlines for sure, what right now is going to say,
Speaker 2: you know, it's not a major challenge. The operators and
Speaker 2: the contracts and relationships that we have give us what
Speaker 2: we need in terms of availability. It hasn't come up
Speaker 2: as a concern.
Speaker 1: Alan back to the relationship with with your your sister
Speaker 1: company Flex. If we think about their swim lane, would
Speaker 1: that would would somebody like Sentien get would be like
Speaker 1: an entry level or like a you know gateway drug
Speaker 1: to private aviation for lack of a better term. And
Speaker 1: then once once they're uh hooked on it, maybe they
Speaker 1: and and maybe they get maybe they make more money,
Speaker 1: maybe they have a big exit. Then would they move
Speaker 1: to Flex because that would actually include fractional ownership and
Speaker 1: that's actually more expensive product.
Speaker 2: You know, it's it's a great question and help as well,
Speaker 2: help help explain the swim lane a bit more. You know,
Speaker 2: we look at it and certainly people's needs do change
Speaker 2: him for sure over time where they can scale up
Speaker 2: and they can scale down. But if you look at
Speaker 2: it in terms of the hours that you typically use
Speaker 2: in a year, you know, the cardon fits right in
Speaker 2: that swim line of somebody that's flying between twenty five
Speaker 2: and seventy five hours per year. If you scale up
Speaker 2: beyond that and who needs change and you're in you know,
Speaker 2: one hundred hours plus a year, depending on what your
Speaker 2: personal needs are, the fraction is the right certainly is
Speaker 2: the right fit for you in that regard because you
Speaker 2: know it's going to give you the economies a scaler
Speaker 2: for sure. So you know, again I go back to
Speaker 2: us being the consultative mode. Is if we see somebody
Speaker 2: that's graduating into that swim lane, yeah, by all means
Speaker 2: we'll make sure that we broke and bridge the relationship
Speaker 2: so that they can scale all right.
Speaker 3: You mentioned that your demographics getting younger mid to late forties.
Speaker 3: Just tell me, has Tim taken a ride on your plane?
Speaker 1: Hi, highly confidential segment just between us. That's part between us.
Speaker 3: Hey Alan, good to catch up. As always, be bu
Speaker 3: Alan Wash, you bet take care Alan Wash, he's president
Speaker 3: of Senti and Jed joining us from Boston on this Thursday,