Private jet flights still struggling; the Coast Guard is in charge of a flying boat?

Jessie Naor (00:00)

Good morning and welcome to the VIP seat. It's September 12th and today's top stories include how Canadian pilots are looking for a pay parity with their US counterparts. And in August, we continue to see a decline in charter flights. Your hosts today include

and our co -host, Shaan Bhanji So

up, sit back and let's take

Alright Sean, so Atlantic Aviation, who's been operating the Aspen

since 2006, they are almost in the home stretch of winning a new 30 -year lease term at the airport. But what's interesting about the deal is that it used to be the county got about $1 .2 million from the FBO annually, and in this deal they've had to give up a lot more and it looks like the first year is going to be $19 million in revenue. That's it.

Shaan (00:36)

.

Jessie Naor (00:53)

10

on what the county used to be making, so I'm expecting some higher landing fees in our future.

Shaan (00:59)

100 % man, do I wish I was part of that deal, jeez. I would love to be counsellors of that deal anytime.

Jessie Naor (01:05)

I mean, it's crazy. Well, they do have to give them $150 million in capital improvements. So there is some capital outlay as well.

Shaan (01:15)

And what are your thoughts? What do you think, you know, coming back to the negotiation table and getting to that kind of number? I mean, what gives? What's the, what are they doing? Where's the, where's the hidden diamonds, you know?

Jessie Naor (01:29)

Well, I think, you know, for someone like Atlantic, they've got over 100 locations already. I mean, Aspen is one of the jewels, right? You know, when it comes to private flying, especially at certain times of year, that's where everybody is going. So I don't know if it's maybe a footprint thing to be there. Maybe the margins are just that great when you're the only field at Aspen Airport and a limited season. mean, I can't I don't know what the landing fees there are anymore. But I know when we used to have phenoms going in there, I mean, it wasn't.

Shaan (01:39)

Thank

Jessie Naor (01:59)

unusual spend a few hundred dollars just in one fee so

Shaan (02:03)

Yeah, I find it interesting because, you know, in up north here in Canada, we typically have airport authorities that regulate the airport and the space and the

around it. So, you you're always subject to the issue of regulatory pushback, right? When you're trying to make any sort of changes, right? Whether it be leasehold improvements or whether it be, you know, I want to make a new hanger on this side, right? Or I want to lengthen the runway. Anything really becomes a point of contention and

Jessie Naor (02:12)

Mm

Shaan (02:29)

You know, that's why things take so long to develop out here. And you don't typically from, from the North looking to the South, I find, you the U S is just that you have so many more airports. There's, there's so much more capability. And so I find it funny to see something like this, where, effectively the tenant who's, it sounds like they're already a tenant there and they're trying to renegotiate something where they are, they're in a place where they feel that they have to make it so incredibly lucrative, right.

authority there. seems it's probably that right it's probably the location is incredibly incredibly lucrative so they know the revenue is there so it's just a matter now of really sounds like you know who gets the biggest piece of the pie

and that's a really tough negotiation.

Jessie Naor (03:11)

Well, they went, they're ramping things up over the 30 year term. It's going from 19 to 44 million, which I guess maybe over a 30 year term doesn't really outpace inflation. I haven't done the math on that. But I wonder if they're going to be adding more potential revenue streams, say more hangarage. I don't think there's a lot of space left at that field, but.

Yeah, I certainly would expect more ramp fees, more sitting fees, more everything in the future probably.

Shaan (03:40)

Well, I mean, it begs the question, you what is the primary revenue source of an FBO? It's, would venture fuel. And then I would say second in the list would probably be ancillary fees, right? So, related typically to real estate, right? So hangarage fees, ramp fees, like you mentioned, landing fees, those are the only other revenue grabs but you know, what's that split?

Jessie Naor (03:47)

Mm -hmm.

Shaan (04:01)

I'd be curious to know what it is because I think it differs from geography to geography.

Jessie Naor (04:06)

Yeah, an Aspen in particular would be unique because a lot of airplanes need to come in light or leave light just because of the high altitude restrictions. So, you know, I wonder if that's a pro or a con. Like, do you end up taking more fuel because you had to go in light or you're you're just taking a little bit going out to it be it'd be interesting to to analyze.

Shaan (04:26)

Yeah, well, that becomes challenging too, right? Because when you're at a high altitude, nobody's coming into tanker, right? They're looking at optimal fuel. So, know, it's like an extreme case of this would be like Denver, right? That insanely long runway at high altitude, right? I it's probably, I don't know how they're doing business out there when it comes to fuel. maybe they're charging crazy handling fees or something.

Jessie Naor (04:44)

you

Yeah, well, good for the local county. I hope the residents don't complain too much about the airplane noise because they're about to get a little bit richer.

Shaan (04:55)

I guess good luck to them. you know, I'm everybody who's ever worked in aviation knows about Eagle and Aspen and those are, you know, the key airports and big fractional providers go in there all the time those hairy approaches. So we know that at their, you know, we know the demands there. So it makes sense that this is, you know, there's some point of contention.

Jessie Naor (05:15)

So this story is full of puns if you can come up with them. I don't even know which one to start with. So I think it's a great example of how a lot of people look at private aviation and they say, it's for the celebrities and the politicians and all these fancy people. But last week in Scotland, there was a very important helicopter mission that was carrying 500 pounds of human waste from a nature reserve in Scotland.

how about that shit-uation, Shaan

Shaan (05:48)

Did you just drop a pun there? That was good. I wasn't expecting that one. I mean, you know, here is a perfect example of the incredible utility of general aviation, right? I mean, this is a remote location in Scotland. It is a place where you can't even take a fixed wing airplane, right? There is no airstrip. And, you know, they're trying to keep the land and preserve the land

Jessie Naor (06:09)

.

Shaan (06:14)

the way that it should be now.

Could they have just dug a massive hole and put like a porta potty there? I guess so, right? I'm no agriculture expert, but I think that that might wreck some of the vegetation that lives around there and maybe some of the ecosystems, the habitats. So, I mean, you know, what is the other options, right? Other than, you know, taking a brand new eVTOL and having someone, you know, pull it out. Too heavy, by the way. Don't get me started about eVTOL and electric. But...

Jessie Naor (06:29)

Okay.

Shaan (06:44)

This is the only way, vertical flight, right? And you got to get a helicopter in there and they got to just get it out there. So it's an incredible example of how, you know, our industry does some incredible things, you know, beyond the typically touted ones, right? Which is, you know, medevac and organ transplant, something that you're obviously intimately familiar with. There's a lot of utility

Jessie Naor (06:47)

Thank

Thanks.

Mm

Shaan (07:08)

from the industry and we just have to do, I think.

I wouldn't say actually, no, I'm going to say it. We do a poor job of representing our industry and how the utility that it brings. the reason why is because some of the digital, at least from my understanding, some of the digital media channels that people advertise in, they tend to get stuck with, you know, the Google PPC keywords of luxury and, you this is so private executive, like how many companies do know that use that same language, that same terminology and

Jessie Naor (07:31)

private, executive.

Shaan (07:38)

Because of this overuse of what I would argue is probably only maybe 20 % of our industry, if not less, it's now become perceptively as though that is our entire industry. And so we need to kind of take that back and we need to figure out a way to properly represent our industry. And that's no easy task.

Jessie Naor (07:58)

No, and I've had that experience personally. I ran a charter operation that was mostly

smaller aircraft, light jets. We're talking carrying generally three to four people. We didn't fly a lot of celebrities. A lot more of our work was utilitarian. It was people whose names you wouldn't know, but they had to get to their meetings. They had to get to their families after a meeting. Every now and then, again, we would get a

on a light jet.

Let me just tell you, when Matthew McConaughey's name came up, I just wanted to go as a flight attendant. man, just one flight. We only got him for one flight, but I still think about it to this day.

Shaan (08:32)

Yeah, well, I mean, I bet we all have our list of people we wish we could meet when we're working in this industry, right? But, but yeah, no, I mean, the question with that becomes, you know, where, where do you start, right? In terms of changing the people's perception of this industry, is it something that's here to stay? Is it just something that we're going to be battling till the end of time? Or is there really going to be an inflection point where, you know, we, I think you almost have to really, because of the

Jessie Naor (08:40)

you

Shaan (08:59)

this industry is such a fragmented industry. When you're trying to make a large change, it's very difficult, You kind of have to, it's like herding cats, you got to corral everybody together to be able to make any sort of, you know, impactful change. So it's difficult. Does anybody want to do it? Probably not. And so the incentives aren't in line and maybe that's why things aren't changing. But I think just talking about it, right? And, you know, putting

Jessie Naor (09:22)

Yeah.

Shaan (09:25)

poop utility on display is a great way of maybe a great provocative way of saying, hey, by the way, you know, we move poop too, you know?

Jessie Naor (09:27)

you

Yeah, we do all of it. It's amazing. Well, and two, in addition to the poop critical mission they were completing, they were also helping restore peat lands around there. It's interesting, as I didn't realize this in Scotland, and I'm going to murder the name of this, but it's called a bothy? Raboothee? Bathy? I don't know. But apparently there's cottages.

Shaan (09:36)

Right.

I dunno.

Jessie Naor (09:57)

all over Scotland that people can just stay in for free if you're hiking the Scottish Highlands and enjoying nature. So it's very cool. think that, these things exist in the first place and that they go send helicopters to clean them up. It's pretty fun.

and I did have to convert kilograms to pounds because I had no idea what 20 kilos was and I needed a little Google help there. So I'm sure you would have already known.

Shaan (10:19)

2 .2. We as Canadians, grew up and we know it's 2 .2. That's how you convert. We just know. We say it in kilograms and they're like, you're American? times 2 .2.

Jessie Naor (10:30)

Got it.

Shaan (10:31)

And then we usually have to do the math for them because, okay, I'm not going to go there.

Jessie Naor (10:34)

I like that. So you guys are like calculators and converters. Great. Well, you were talking about global uses of aircraft, and I actually think that's a really good segue to our next story. So ARGUS data, they come out every month with reports on charter activity and what's going on, you know, in terms of flight activity in the market. Global traffic is increasing, but unfortunately, we continue to see declines in North America and in Europe, mostly in the charter.

135 space as well as 91. The biggest loss over the last month was large cabin jets, which were doing 9 .3 % less from over a year ago. And I started digging into the numbers here and we really haven't seen any year over year growth in the charter industry since May of 2022. And I'm really wondering when is this gonna turn around? How long can this kind of dip, keep dipping?

Shaan (11:17)

Mm

So it's interesting, right? What I found really interesting about that is, you know, we know here in North America that

on a bit of a decline, right? But it's really interesting to see beyond North America and Europe, right? Which typically you would say is a fairly good representation of business aviation worldwide, right? I think generally it's about 70 % of business aviation happens to be in the United States, right? Not even North America, just the United States alone. And, you know,

on the fringe, think, are other countries, I think like Western Europe or Europe in total, I think is something like 20 % give or take. But you look at this and you say, okay, well, North America overall and Europe have both declined, but the rest of the world, what's the rest of the world? I would love to know what is, I mean, which countries are we talking about? And what's the distribution, right? Is that whatever that percentage, whether

Jessie Naor (12:19)

Yeah.

Shaan (12:22)

was like 37?

percent of the remainder is up significantly. I don't know. I wish we had Richard Koe who's the founder of WingX on here because he would know exactly. And he would tell you like data by data bit by data bit. So there you go. There's your next guest, Richard. If you're listening, you got to come talk to Jessie and dispel all this stuff for us. We need your data, my friend.

Jessie Naor (12:25)

Yeah.

Yeah.

yeah. Well, you have

We need a data show. What I wonder too, mean, look, those are obviously gonna be emerging growth locations for private aviation. We're talking about Asia, China, India, those. And when you look percentage -wise, comparatively to the US and European market, they're so small that yeah, those gains can appear in a much more skewed manner, potentially.

Shaan (13:08)

Mm

Jessie Naor (13:09)

But yeah, no, definitely. WingX or any of ARGUS guys, please let me know if you want to be on the show, because you guys are great at what you do. But Fractional.

Shaan (13:17)

Well, Wings

and JetNet are friends now, right? So bring them all in together. Get Rolly and get Richard. I think that those two alone will provide such an incredible insight. this crazy, fragmented industry,

Jessie Naor (13:21)

yeah.

Shaan (13:32)

very difficult and they do a great job of pulling from different data sets and being able to.

compile that together, put some sort of narrative together.

Jessie Naor (13:38)

Yeah, and it's

too that a lot of these companies are providing some free data, know, so the small operators can go like, okay, it's not just me, like I'm, the light jet, all light jets right now are kind of, you know, having a crunch or, you know, this size cabin. I know that when we were growing, it was really nice to be able to look at some of the risk reports and just kind of track benchmark ourselves against everybody else. But I will say, Fractional is actually doing great. I mean, they've grown by almost double digits every single month over the last year.

Shaan (13:45)

Thank

Jessie Naor (14:04)

but just goes to show you their airplane orders are coming in, their agreements are locked up, and that's probably having a pretty negative effect on the charter companies at this point.

Shaan (14:13)

You know what's crazy about that, Jessie, is I feel like the whole industry is backwards. I've never understood why rationally, right? mean, forget about everything else. Let's just talk pure logic, pure rationality here. Why should fractional

the one to enjoy such tremendous growth in our space when ad hoc charter is not only a cheaper, right? I mean, depending, right? But as a general rule, it's typically cheaper.

Jessie Naor (14:42)

Mm

Shaan (14:42)

and you have the flexibility of different aircraft types, potentially different operators, right? Why rationally, if I have the choice and I want to take a trip somewhere, assuming that there is a way to do that really easily, right? We'll leave that alone for a second, but let's say there's a really great, easy way to go and be able to book, you know, ad hoc on a 135 on a plane that's going to be suited for the mission that I need to do.

Jessie Naor (14:59)

Thank

Shaan (15:11)

It's safe. Everything's vetted. Everything's okay. Versus a fractional, right? Where I've basically, it's like a timeshare. You go on vacation in the South and then, you know, someone comes up to you says, Hey, you pay me this much money, you know, lump sum. And then you'll get, this is effectively what the fractional program is, right? There's no difference. And when you start to really get into the detail of the contract, you're looking at, well,

Jessie Naor (15:28)

Yeah.

Shaan (15:33)

know, peak

you're actually going to get charged more. there's certain blackout days, you know, and when you start to put the 365 days of the calendar together, you're like, wait a minute, this is like less than 50 % of what was advertised is what I'm getting. But it's no longer a problem for those customers because the alternates seem to be really sparse. And I think, you know, as I talk about it, I think the problem is, You know, if I'm sitting here and I say,

tomorrow I want to go from X to Y and I try to access the ad hoc charter market. There's no single source to do that. There isn't a way. And it's incredibly, you know, it's fragmented and it's hard, but at the same time for 135 and 704 is up here and the equivalents around the world, they're, you know, what's the incentive for them to be able to, I mean, they have an incentive to market themselves, but why would they want to be on the same level playing field with another operator?

Jessie Naor (16:07)

It's tough. Yeah.

Shaan (16:30)

if know what I mean.

Jessie Naor (16:30)

Well, I think he brought up fragmented and that's probably where a lot of this comes from.

still a lot of small aircraft operations out there and they don't answer their phone after five o 'clock at night. You know, so from a customer service perspective, you know, if I'm spending that much money on something, like you better pick up the phone when I call. some people have had that experience. Also to a lot of the charter airplanes that are out there, they're still owned by someone. So the dreaded owner approval aircraft is a problem.

Shaan (16:41)

Big problem.

Jessie Naor (16:57)

You you've got something locked up and then two weeks before Christmas, owner decides that they want the plane instead and boom, you get the boot. So I think like the overall customer experience in 135, there are some really good companies that do it right. And I think there's a lot of good brokers that can help buffer the direct customer from that experience. But that's kind of been the history of our industry. And I think we need to, everyone needs to do a little bit better job on the customer service side to deliver the same experience that people are getting from.

the more expensive fractional experience.

Shaan (17:27)

Yeah, it's true. And you know, there's something to be said about standardization too, right? Because, you you look at the big two, right? Like NetJets jets and Flexjet , right? The fleet is pretty much the same and consistent across the board, right? The level of service is consistent across the board.

Because there, it's a culture thing. It's, it's a culture problem within those

organizations to start with. And if you have a sales and service culture that is, you know, you're pushing for excellence, then you're really raising the bar and you're allowing yourself to be in the market where you're significantly more competitive. And those operators we've seen do incredibly well. So I guess.

Jessie Naor (17:55)

Mm -hmm.

Mm -hmm.

Shaan (18:07)

This is, I don't know what I'm saying. I you know, our equivalent operator out there, it's time to dig deep. Look, look back at your company culture. Look at your level of service. Look at your, know, become a more sales oriented culture

you will start to see the benefits immediately.

Jessie Naor (18:21)

Yeah.

So you are Canadian if people have not figured that out by now with the kilogram conversions and everything else. So there's some interest. Yeah, just a bit. Maybe you just really like hockey I don't know. In Canada, you guys are facing a shutdown of your biggest air carrier in the nation. There's crew members in Canada are looking basically for pay parity least from what I understand.

Shaan (18:31)

Well, this sort of gives it away too.

Haha

Jessie Naor (18:52)

with their American counterparts. obviously we've seen some huge increases in US salaries. So, I don't but you probably have more insight on this than I do at this point. So, what do you guys hearing?

Shaan (19:02)

Well, it's basically what the Delta pilots experienced last year for the US. I mean, they came back and they said, hey, want, I think it was something on the order of 45 % wage increase across the board. And they got it. And so the Canadians were sort of looking down and

you know what? We should probably ask for the same thing. And lo and behold, here you go.

If you take a step back and you look at it, know, geography is totally different scenario. the restrictions from a regulatory standpoint, completely different, right? that's the key difference. And, know, sometimes we ought to be happy with what we have here in Canada, because we're not experiencing necessarily the same.

severe, I'll use the term severe pilot shortage as the US is having. So I think that it's, they're looking down south and they're saying, hey, you know, how come, why do I have to move to Atlanta, Georgia to be able to get, you know, the same salary But, they're not comparing apples to apples. And think that's the problem here. But nevertheless, fun fact about Canada is we basically have three

Jessie Naor (20:03)

Yeah.

Shaan (20:08)

We have WestJet,

We have Air Canada and then we have, think on the list, it's fair to put Porter Airlines run by Robert DeLuis and his company. Porter is still more of like a, I guess you could qualify them as like a regional airline. But Air Canada still bar none, it's the largest operator, 705 out here.

that equivalent US to 121 that we have. And so, you if you want to go from, you know, Montreal to Moose Jaw, guess what? You know, you're not flying WestJet or Porter. You're flying Air Canada, right? And so they do definitely have that monopolistic character. And so the government is going to support them, you know, regardless of what happens. So, you know, as always in Canada, the poor taxpayer pays the burden of everything. But, you know, what I found really interesting about this was looking at

Jessie Naor (20:39)

Okay. Yeah.

Thank

Shaan (21:00)

the comparison to Delta pilots and what's happening in the US because I found a little article that I think I shared with you too. If you want to talk about, let's talk about it, Jessie. Let's talk about the 1500 hour rule.

Jessie Naor (21:07)

Yes.

yeah, mean, like that's always on everybody's mind when we're talking about the crew shortage and like it didn't even dawn on me what we said to me. was like, right. You know, like there is such a massive difference in requirements. I mean, because of the Colgan crash in 2009, we got the 1500 hour rule, which doesn't exist in Canada, takes a whole new spin on this. So technically, I mean, if you're talking about first officers at least that are lower time.

there's definitely a huge experience gap, like just minimum coming into the cockpit. So it does play a role and I think compensation.

Shaan (21:44)

100%. And I mean, if you think about it, track it timeline wise, right? Colgan error, that was the Buffalo Q 400, right? That crashed pilots, right? PIC and right seat were way beyond 1500 hours, right? So that wasn't an issue. It's not like they were, it's not like they didn't have the time in error. It's just, they use this as a way to say, okay, well, we're just going to create this 1500 hour rule restriction.

And obviously the airline pilots, what is it? The association, I believe what it's called. I think we have the equivalent. Yeah, we have an, we actually have an equivalent ALPA out here and they, that's the beginning

Jessie Naor (22:17)

I'll be off.

Mm

Shaan (22:24)

when this, you know, I guess you could call it, I'm going to use the term manufactured pilot shortage happened. And right, right. And to only exacerbate the fact that, you know, COVID hits and you know, there's the sudden drop of

Jessie Naor (22:30)

article. It's not an article.

Shaan (22:40)

crew members and you know, they're probably switching careers. They're moving out of the space. So all that to say that cumulated to an effect of, okay, now we have significantly less crew supply and therefore guess what happens? Well, wages just go up, right? And the companies have to pay for it. So in Canada though, we didn't have the 1500 hour rule. In Canada, you have to have, I believe, 750 hours to write the ATPL exam, which will effectively allow you to fly for an airline. So I mean,

The bar is lower. maybe that's part of the reason why, you know, we can't compare apples to apples here. And there's other obvious, you know, geographic and socioeconomic concerns, but I think that, I think it's fair to point to

Jessie Naor (23:14)

Right.

Shaan (23:24)

as being the main driver.

Jessie Naor (23:26)

Yeah, no, I mean, it's just it's a bigger pipeline in general. I did meet the Colgan family or one of the victims families last year that I was at an air safety event and just to play devil's advocate on their on their behalf, you they'll also tell you that, well, since the 1500 hour rule, you know, look at the improvements that we've had in safety and like you can't argue a more experienced flight crew is going to, obviously result in better outcomes from a safety perspective. But at the same time,

I think we're entering a point and now you start to see it as people are going out of business, Volato some others, they're in serious crunches right now, costs are exorbitantly high, even for airlines. There is a point at which this doesn't work anymore. And how many people have to go out of business, how many people can't afford pilots or hiring, it's gonna come too

And if not, this it'll be single pilot, autonomous.

co -crewed aircraft or something, but something does have to give eventually. And when you have such a constrained pilot pool, it just doesn't work

Shaan (24:29)

Well, you know what? It's going to happen sooner if we stop spending our time and money in fully electric aircraft and we spend more time

Jessie Naor (24:37)

Hey.

Shaan (24:38)

trying to figure out the single pilot airplane or more of an autonomous aircraft. mean, there's tons of, there's very basic technology that can be utilized in the cockpit that we're already utilizing some of it today. Really, mean, a pilot's job has

significantly changed. I would argue a pilot is more of a systems administrator now than they are really flying the plane. take that one step further. We haven't been able to because we would be distracted with other technologies that are coming into play. But if we really just toe the line on that, I think that we can make significant differences as to, you know, crew requirements and how many people actually need to train to become pilots per se. Right. Let's, let's say the equivalent of a pilot as a doctor and

Jessie Naor (25:06)

Right.

Okay.

Shaan (25:21)

Maybe a first

is like a registered nurse, right? We need more registered nurses, right? It's, it's, I think it's, it's coming down to that. And it doesn't mean that either one is less competent or anything like that. It's really just, you know, we, the burden of training is incredibly expensive and you know, to be able to put all that up and risk, you know, leaving that, losing that person, it's incredibly costly with a industry that it's already high fixed costs, high barriers to entry. It's, know,

Jessie Naor (25:47)

Yeah. Well, we've seen pilot unions already starting to fight, you know, the autonomous

Shaan (25:50)

It's an economic nightmare.

Jessie Naor (25:56)

But, from a safety perspective, they do need to think about how important that technology and the development of that technology is going to be for safety, if not replacing them in the cockpit, augmenting their skill set, you know, augmenting, you know,

visual cues, information, the things that we'll learn from trying to create autonomous flight will also have massive impacts on how they fly airplanes in the future. So I get it. I understand not wanting to be replaced by technology, but we all can't be the John Henrys out

trying to build our railroad.

Shaan (26:25)

know, it's probably a terrible, probably a terrible analogy, but you know, I think that my driving has improved partially because I've gotten older, but also because of the technological innovation that's happening in automotive world. And one of the things that I think about is I've never had my car stopped for me before.

Jessie Naor (26:37)

Of course.

Shaan (26:45)

when it notices some car in front of me that's probably in a line of traffic that's stopping. First time in my life, car sort of tapped the brakes and I was like, I should be paying attention, Dumb little human over here, didn't figure it out, but the car figured it out before me.

Jessie Naor (26:55)

right, right, that makes sense. Yeah.

Shaan (27:00)

And so we've embraced that for drivers, which driving arguably has incredibly more risks, right? It's incredibly more risky to drive yourself from one place to another and then take an airplane. And so why haven't we embraced

you know, similar technology in aviation, right? I think it's, you know, I think there's the union factor. I think there's also the, social view of, want to see two people at the front in the cockpit, which is, which is a bit of a barrier too. But again, you know, lots of work to do to change some of that perception.

you know, we don't do a good job in this industry of comparing flight to as a means of transportation.

Jessie Naor (27:37)

Yeah.

Shaan (27:37)

It's still highly romanticized, right? And so if we really just start to think about, you know, flying is effectively a mode of transportation, similar to driving, similar to taking a train, you start to break down those barriers. And that's something that's, that's again, tough to do, but we should be spending our time and energy there for sure.

Jessie Naor (27:56)

Yeah, but don't worry. I don't think anytime soon you're going to be losing your two pilots in the cockpit. Some operations one but I think you should always have two by the way. But, you know, with that, considering how much airlines have slowed down the hiring and the layoffs that we're seeing, I think at least for the time being, there's a lot less pressure on some business aviation operations.

with their crew members right now. So enjoy while it lasts and go ahead and scoop up some talent out there.

Okay, so I'm really excited about this, Shaan And I don't really get excited about, you know, newfangled electric flying things

but this one I think is really cool. the US Coast Guard, not the FAA, has recently allowed Regent's Viceroy Sea Glider to start to conduct testing, essentially.

They plan to start service in 2025, probably a bit ambitious. But the really cool thing about this is because it is hovering over the ground or over the sea at 30 feet. It's technically still a boat. So the US Coast Guard will be in charge of

certifying the craft, not the FAA, even though it's kind of a plane. I just think that's a really cool concept.

Shaan (29:02)

You

How is it floating? So it's like a hoverboard?

Jessie Naor (29:06)

Basically, and this is not new technology, this is something like the Russians were doing many, many years ago. They even have like Navy aircraft that do this. But it's a wing -in ground effect. I believe they start out like with a hydrofoil, then eventually just the air against the sea is what's keeping the thing afloat. But they're planning on it being fully electric. It's supposed to go 150 knots. Right now, with current battery technology, they think they can get about 160 nautical miles out of it.

with future battery

they're hoping for 500. So they're gonna start to try to compete with these small commuter airlines that are up there in

New England and other places, ferry hopping. do you believe Sean? Is it possible?

Shaan (29:51)

Whenever you ask me if you believe in something that's fully electric, you unleash the rant in me. and again, not politically, not that I don't think it's clean, purely from a physics and like, you know, draw your control volume around like how efficient is this really? and I could probably dispel those myths, but it's so cool.

Right? There's no doubt about it. It's really cool.

So it makes me think of this company that's based out of BC in Canada on the west called Harbor Air. And what they do is they actually do, they have seaplanes. They're effectively little single engine piston airplanes that are doing hops between the islands out there.

And they run on floats. And this is an alternative to taking the ferries. Now, is there appetite?

for having a really cool 12 PAX hoverboard just like whooshing across at 150 knots. It's effectively the same speed, right? So I think it comes down to what are the economics of it, right? Does it make sense? And, you know, 12 passengers is way better than what Harbor Air is carrying right now, right? And their little airplanes. So there's something interesting there. I just can't fathom it being

I can see it being like cost punitive, significantly cost

Jessie Naor (31:09)

Yeah, we'll have to see how they end up with the numbers. But I mean, I will say I spent quite a lot of time in Rhode Island this summer. We did like Newport and all those areas over there. There's a huge ferry business. I mean, they've got 500 passenger ferries going back and forth to Nantucket, Martha's Vineyard, Shelter Island. There is a lot of need there and even commuters from Boston going over to those locations too. And I'll be honest, going 160 miles per hour over water

sounds pretty cool to me, even if it's more expensive.

Shaan (31:39)

Right, and then you know what's great about it, the other big thing that's great about it is you're not subject to weather, right? Because I mean, well, you're flying in the weather, but you're not in the clouds, right? You don't have to worry about any of that. You don't have to worry about icing, right? All those things sort of fall away. And so it does definitely make sense, right? We're not talking about aviation here. We're talking about a boat, effectively. That's, I guess, a couple feet off the sea line.

Jessie Naor (32:05)

Yeah, I mean the other alternative to that is that you also can't always see what's in the sea. So if you come up on a log or a buoy or debris, a small craft.

Shaan (32:12)

Well, you would hope, you would hope that, you'd hope the radar technology is sort of in play there and it's going to figure that out for you, you know.

Jessie Naor (32:16)

Hopefully, can you imagine being a little sailboat? You're just enjoying your day and you're accidentally in the ferry lane one day and this flying ship goes past you at 160 knots

Shaan (32:29)

You

That would definitely happen. just feel like that's something that would happen and it be in the news and they're like, no more hovercraft for everybody. Right? It's like,

Jessie Naor (32:35)

you

But I think it's awesome and I hope they're successful and I would really like to be a customer one day.

Shaan (32:45)

I think that's really cool. I would like it so much more if it was hybrid technology and it wasn't fully electric and if it was also an eVTOL craft. So if it did hit a land border, it could just, no problem, vertical lift and off we go to where we need to go.

Jessie Naor (33:01)

Pretty cool, pretty cool stuff. I do like that they're actually considering existing battery technology and they're not promising some crazy lift ratio with future technology. They do seem to be approaching this from a more realistic standpoint, if you can call a flying boat a realistic idea. Go Coast Guard, I love this. I'm hoping, are they gonna be more stringent or less stringent? Do they involve the FAA at any decision -making point or?

Shaan (33:19)

Well, I'm sure the Coast Guard can.

Heh.

Jessie Naor (33:30)

I wonder how that all works.

Shaan (33:32)

Probably not, that'll just slow everything down,

Jessie Naor (33:36)

And with that, we will wrap up this pod today. Thank you for joining us. The VIP seat is the fastest way to get the top news in private aviation. Don't forget to subscribe to our weekly email digest and make sure that you subscribe wherever you get your podcasts.

Comments and suggestions on what we should cover next are always welcome, so stay in touch and we'll see you next time on the VIP seat.

OVERTIME

Jessie Naor (00:08)

Okay, so we were talking about, we're calling this overtime of the VIP seat today, because I think the topic is amazing, and if people want to hang around and listen to something else, they can. So I did an empty leg video years ago during COVID, when all of our companies were shut down, we're just sitting at home doing nothing, and I'm a type A person that can't sit at home and do nothing. I made an empty leg private jet video on YouTube that's gotten tens of thousands of views, much to my surprise, thinking this silly little two minute video was ever going to do anything.

And then Shaan starts telling me why that's happening.

Shaan (00:42)

Yeah, you said the magic words, right? Empty -leg flights. Highest searched keyword, Google PPC, right? And once you figure that out in our space, you just start putting it everywhere, right? As one does when they have an SEO strategy. So you put private jet charter, private jet flights, empty -leg flights, and then you start to attract the typical traffic that you would in our space. And so that's, it's, I hate using the term, but like a hack.

to getting in the right sort of firehose of traffic that you want to be in on the digital end. But let's talk about empty legs for a second, Jesse, because people don't understand why empty legs are helpful and useful when you're running a 135 or whether you're a charter broker. So I'm going to dispel a big myth. If you think, if you're an operator or you're a charter broker and you think that empty legs are going to be something that you can just sell like hotcakes and you'll

Jessie Naor (01:17)

Let's do it.

Shaan (01:37)

You know, you'll find all the people, you'll build it and they will come in the beautiful style of Field of Dreams. hate to burst your bubble, but that's not what they're useful for. fact, through using the fly easy tools that we built over time and launching them on customer websites, 135 operators, bunch of charter brokers, you know, we learned because we believe the same thing in the past. And I sincerely did too, but I learned that.

having the ability to show live inventory on your website through any digital medium and having customers engage. know, anonymous visitors, web traffic, you name it, right? Whoever it is engaging with live inventory. So you've done a bunch of things. You've a shown signs of life. You've shown that, you know, these are my airplanes, they're flying. These are the deadheads against the fleet. Right? So I'm actually a real business. Right? And

Jessie Naor (02:28)

Yeah.

Shaan (02:31)

they get to look at where you're flying because effectively deadheads are like the antithesis of the originating charter booking. So, so all this really cool information and it creates engagement. And what ends up happening is I heard, I had a lot of 135 operators that were running these tools call me and say, Sean, you know what? We've loved your empty leg tool because, and, and here I'm thinking, you know, when I was naive that they'd say, we sold a bunch of empty legs and we made a ton of money.

No, in fact, they call and say, you know what? We just got a new jet card customer. We just had a customer put money on account with us because he was happy to work with us and he's happy to see inventory that matches his needs, et cetera, et cetera. So the reality about empty legs is it's an excellent, it's it's an industry phenomenon. That's it's just an artifact of our industry and the way we fly, it's going to be 30 % or more give or take. And it's always going to be there. Use it, leverage it.

Jessie Naor (03:13)

Thank you.

Shaan (03:29)

and say to the customers, hey, I'm a running operation. These airplanes are flying. They're effectively the standby of private aviation. And so every now and then the stars may align and you'll have a retail customer that'll say, I'm going there anyways. Maybe that'll work. And they'll hop on the empty leg and you'll be able to sell one. But the reality is it's a great marketing hook to be able to reel in those customers. And it's a great piece of loyalty, right? So I'm an existing customer and I'm loyal.

Jessie Naor (03:36)

Yeah.

Mm

Shaan (03:57)

to your 135 operation, it's really cool that you're gonna be able to show me, hey, these are where the airplanes are flying, which is effectively showing me deadhead legs and giving me the opportunity or at least the perceived opportunity that I can participate in that in some way, or form. It creates that link that I would otherwise not have with you as an operator, with your brand and with your company. And that's why it's so incredibly powerful. So don't try to sell a bunch of empty legs, leverage them to be able to sell.

Jessie Naor (04:03)

Right.

That's it.

Shaan (04:26)

your core value and what your core business is, which is selling charter.

Jessie Naor (04:31)

And they try to sell them because that is the whole, you in the process, you know, you're really, doing all these things. And like, I mean, I can tell you from experience, we used to send out emails as a company and it was, go fly to this beautiful luxurious destination next week, or we're having this great event in two months. Those emails, just the open rate was terrible. People didn't really click through. They weren't engaged. It wasn't interesting. But the second you start sending out empty legs, especially if you can,

specifically send the empties that that person would be interested in from their home airport or from the places that they like to go to and from, you've just really customized content for an individual and that's incredible. I mean, that's a personalized marketing experience. But yeah, how many we actually sold of those, very, very small number. It would work. So, you know, sometimes customers would be getting a great deal on a flight. A lot of times our employees would love to take those empty legs.

when they're available. So good employee benefit if you can do it. But yeah, I totally resonate with that. But anyone trying to aggregate all these things into filling every empty leg I think is maybe a pie in the sky idea.

Shaan (05:32)

Yeah, it's.

It's a noble pursuit. Let's just put it that way. Right. And if, and if you can make it work, then great. But I think that the key to any of that is really you have first, you have to have a really high quality list of customers, which is very difficult to come by. And then you have to be able to really target and segment those customers by location, by needs, typically what they would fly on. Right. And in having engaged with some retail customers as well, you know, some customers.

Jessie Naor (05:43)

No, no.

Shaan (06:08)

look at deadhead legs for their pleasure travel, right? So they may be jet card holders and they may be fractional customers and they look at the deadheads as well. I'm going to go down to the south, you know, at St. Martin, you know, between this day and this day. I like to look at empty legs. Plus I feel, I feel good about myself because I'm not booking a full charter trip and I'm just, you know, I'm hopping on an empty leg and being, I guess you could say it's environmentally conscious, but

Jessie Naor (06:23)

Thank

It's flying anyway, yeah.

Shaan (06:34)

But yeah, so keywords, keywords, keywords, it's all about search engine optimization. And it's also from a digital medium standpoint, but you know, these, what we, we sit, you know, I find it really interesting because 135 operators really sit on a gold mine that they haven't yet mined to some extent. And empty legs is just one piece of it, right? I like to always use the Harrison Ford line, right? Like empty leg is the cookie.

Jessie Naor (06:37)

Mm.

Shaan (07:02)

because they're going to come back wanting a glass of milk and you have the ability to offer that big glass of milk that they really truly wanted in the first place, right? But you can't start by pushing the glass of milk on them. You got to start with the cookie and empty legs is one of those things which builds into potentially like a loyalty program, right? Ultimately, every 135 operator, 704 in Canada has to try and be able to bring in new customers, but also

Jessie Naor (07:09)

Yeah.

Shaan (07:30)

create loyalty around those customers that are already there. And that's difficult because you're not just a private aviation service provider. You're a lot more than that. And that means you have to follow the entire customer journey, right? Which if you're gonna really want to get fanatic about it, it's when they wake up in the morning and when they get to the FBO and where their destination is and which hotel they stay at and when they leave. That entire customer journey, you need to be able to be present as many places as you can throughout that journey.

Jessie Naor (07:43)

.

Shaan (08:00)

And today we just see ourselves as, we're just the transportation sector. But if you open that up, there's so much more opportunity.

Jessie Naor (08:04)

Right. totally. I mean, look how the airlines have done this over the years. think, you know, I read an article a couple months ago, you how did airlines really become banks and not actually airlines? You know, the loyalty memberships, the points, you know, all the value that exists in the credit cards that they're offering. You know, yes, our core mission is to fly people safely.

But let's be honest, it's a very expensive industry to be in and maybe you need to diversify your stream somehow and that can come in many different forms.

Shaan (08:36)

And dare I say it, know, there's, pluses and minuses, goods and bads in the industry about this company. But one thing that Kenny Dichter knows how to do really well is create an excellent brand that people can identify with. one of the, at the beginning of Wheels Up, there was a program called 8760, if you can recall, which I think 8760 is a total number of hours in a year or something like that. If we do the math real quick. So

Jessie Naor (08:55)

Mm

Yeah, I think so.

Shaan (09:03)

But it was, or like, let's just call it wheels down program, right? Whatever it is. Ultimately, it was, you know, exclusive sporting events, you know, a bunch of luxury events and luxury retailers that they all packaged in luxury villa rentals, right? These experiences that just go beyond aviation and transportation, which, and it was such a successful program, right? But you know,

Jessie Naor (09:27)

Yeah.

Shaan (09:29)

then they have to go back to, well, we bought 75 King Airs and we have to fly them, right? So that's a whole other problem that they had, but what an incredible launch pad, right? And you know, only every operator started doing something like that curated for their client base, you know, it'd be a homerun, but it's not easy to do.

Jessie Naor (09:35)

Yeah.

yeah.

with that, we're gonna wrap up our overtime, but that was excellent information for a lot of 135s out there and a lot of folks in general that interested. So keep an eye on those empty legs if you're a flyer out there listening.