Wheels Up Buys GrandView Fleet; FAA Publishes Long-Awaited eVTOL Rules

Jessie Naor (00:00)

Good morning and welcome to the VIP Seat Today is October 24th and today's top stories in private aviation include how Wheels Up has now acquired the Grandview Aviation Fleet.

and the FAA's special regulations on Power Lift and

has now come out.

hosts today include yours truly, Jessie Naor and Tom Lelyo. Welcome to the show, Tom.

Tom Lelyo (00:20)

Hello, hello!

Jessie Naor (00:22)

So sit back, buckle up, and let's take

All right, so because I know everyone is going to want to hear this story, I'll roll into it first. For those who don't know or who are new to the podcast, I was one of the original founders and president of Grandview Aviation, and there was some huge industry news this week. Wheels Up has a

acquired the GrandView Aviation fleet. 17 aircraft, the

was around $105 million, all feed on 300 fleet. So I'm going to let Tom lead the questions here because I'm kind of the new part of the news story and it's probably better he asked instead of me.

Tom Lelyo (01:11)

Yeah, well, I'm

of interested in the story because when I read it, was like, that's cool. And then when we first got on and you're like, by the way, that was my company. I'm like, this just got real. So, so

guess my question is like, did wheels up like call you up over the weekend and just wire you like 1.5, like $105 million or did you sell this before wheels up kind of acquired it?

Jessie Naor (01:32)

Yeah, so we sold, we originally founded the company back in like 2015. We sold to Global Medical Response in March of 2022. We were supposed to happen in 2021, but you know, things got pushed into

next year. But yes, and there's some things that I can't comment on just because of the deal and that transaction. But if you look at what's been published out there and this transaction value, you can see that it's trading for significantly, significantly less.

than what it was proposed to be sold for in the news. Which is, we were talking about this before

show came on too, you you're an entrepreneur, you sell your business, and you're no longer in control of it. What happens to it is what happens to it. And I

stay with them for about a year, but I haven't been there for a year and a half, so I can't tell you.

why this happened, what all the terms in the deal /transaction was. But I will say, my heart does go out to a lot of the team because Grandview is going to be no more at this point, which includes a huge part of the

But they are keeping the pilots, some other things, but yeah,

different.

Tom Lelyo (02:37)

So, I mean, you mentioned GrandView, so they did like medical stuff. So what's the play here for Wheels Up? It's just another operator that they're gonna

over and just expand for their network. Like what's the play here for Wheels Up and why do you think they chose GrandView?

Jessie Naor (02:53)

Yeah, so I think Wheels Up is at a challenge with the fleet that they chose. I think at the time they bought a lot of it from NetJets. They're kind of used and abused airplanes that were already kind of low on dispatch

Tom Lelyo (03:00)

Yeah.

Jessie Naor (03:05)

So this does make sense because I personally know from operating the Phenom 300 how reliable that platform is and how the uptime is just incredible on that plane. So I think it makes a lot of sense for Wheels Up. I think they got an excellent deal given the transaction size and the number of

which you can probably comment on, because this is your field.

Tom Lelyo (03:22)

Yeah. Yeah. When you said one hundred and five or seventeen. Really? Like, wow.

Jessie Naor (03:28)

Yeah, I mean that's what like 6.2, a little less than 6.2 per plane.

I mean they are, you know, it's a large fleet. It's been used and abused as well. So it's not like they're buying anything brand

Tom Lelyo (03:41)

Do you, in your opinion, your experience, do you worry about the large operators kind of scooping up the

Jessie Naor (03:44)

you

Tom Lelyo (03:51)

smaller ones or is this just kind of the nature of things and ultimately it's better for the consumer when it gets more, you know, there's only a few players so it's a little bit more, like organized and streamlined as opposed to just a bunch of mom and pop shops that you go to charter hub and...

and put it in there and you're just like, wow, there's

many options. There's almost too many.

Jessie Naor (04:12)

Yeah, I mean, there's pros and cons. mean, at the end of the day, it takes scale to provide a really good product to consumers, especially in the charter market. Like if you don't have airplanes all over the place,

Tom Lelyo (04:19)

Hmm

Jessie Naor (04:23)

you know, they've got vacation homes everywhere that they want to access. So, you know, for someone to have choice, it does need to be a pretty large company. Otherwise, they have to go to you and buy an airplane because then they can do whatever they want to.

Tom Lelyo (04:33)

Not for me.

Jessie Naor (04:38)

But yeah, I mean it does mean fewer companies of the space at this point, which has been kind of the trend. Everyone's buying up these smaller, smaller companies so that they can build these mega, mega companies. still, at the end of the day, compared to the size of the Vista jets and the

jets of the world, Wheels Up's still a smallish player. Smallish.

Tom Lelyo (05:00)

Right, right. Do you think this was a, was this a play for Grandview because they were hurting or is this just like an opportunity for them? I don't know if you can speak to that or not.

Jessie Naor (05:09)

I mean, you can see that the hours have gone down substantially from where they were.

I think what happened to, and this goes back to the entrepreneur can't control what happens when the company is sold. They wanted to change the model. went from, our business focus was we're gonna do charter, we're gonna do the organ transplant business, and we're gonna have a mix of that. And Global Medical Response was obviously much more medical focused company. So.

And that goes back to, too, like where there's a lot of this going on in this space, transmedics, summit aviation, you know, they're all kind of going after this organ market, which is a good market, but I don't think it can stand on its own. I think you still need to do both. So for one company to decide we're only going to do organ charter,

think it's tough.

Tom Lelyo (05:50)

Yeah, no, I get it. It's not a move you would have made. I get it.

Jessie Naor (05:52)

Not my choice, not my choice. But you know, I think they're gonna have success. I know everyone's probably like, wheels up and more debt, you know, but it takes debt to grow fleets. Like it's, this is the deal.

We'll see as Wheels Up starts to change their Citation Xs out for challengers. I think it's a good move. Those are both good airplanes and we'll see how they do.

Tom Lelyo (06:15)

Yeah, it's interesting. just had a conversation

with a broker because they're in the Excel market and they were getting word of other operators, large name operators that would be upgrading to the Ascend platform from the Excel and the XLS platform. And this is a newer broker. So, he's like, Tom, this going to do? I'm like, well, first of all, it's not what you think. It's not like the company is just going to dump 20...

Excel's on the market and completely erode any opportunity they have. They have different ways that they're going to go about it, but it is going to impact those current owners of those makes and models that are going to be introduced into the marketplace because there's going to be more supply. And so, I think it's important for owners, if you're reading this news and you own an XLS and Excel or whatever else they might be...

dumping it in the next two, three years. I think it said it was a three year rollout. That's something to keep in mind. mean, these are depreciate, they're back to depreciating assets now. We saw the appreciation in 2021, 22. It's been coming down since 22, know, slowly but surely. And I think we're getting close to 2020 pricing where it used to be. So if you have had your Excel or XLS for, you know, two, three years or more,

We're kind of back to it. It might be time to start thinking about what your next move is, whether that's upgrading or getting out of it, whatever. But I think it's

to know for the current owners what this is going to do to the values on the pre-owned market.

Jessie Naor (07:48)

No, that's a great point. I think too, just in general, like I saw a Jet Net story yesterday, I think, but it seems like the market is just in this weird position right now with the election going on, geopolitical circumstances. The market's like kind of funky right now. I mean, is that your experience? Yeah.

Tom Lelyo (08:06)

Funky is a great word. Yeah, funky is a great word. It's stalled in some spots and it's still moving along in other spots. And so the challenge for brokers right now is just finding where it's moving. And that just takes flexibility, adaptability, and hustle. So it's

like it used to be where if you got a listing, you know you would get over asking price in a week, back in 2022. Now it's like you get a listing and it's going to be a little bit of a longer sale cycle.

And I am interested to see what's going to happen in November. Although, I'll be honest, I think for a lot of people, they're going to use November as an excuse because they're not ready to make that decision. They're going to use the holidays next. They're going to use the new year. And that's just human behavior. We might not be ready to make a decision. And so we just will put it off on other blame other things to hold off the decision. And that's where the brokers come in to really kind of cut through all that and say, do you really want to sell and why should you?

Jessie Naor (09:03)

yeah, so it's a weird time in the market. There might be a lot more planes coming into the market as well, but that's good to pay attention to these things because choosing what aircraft you're gonna go forward with and what value you're gonna reasonably expect to get out of it over the next few years could be impacted by these moves. But I will say as much as people have...

of love to hate on

over the last couple years. Like we don't want them to fail. They have a lot of airplanes. We don't want all those airplanes out in the market. Like if Delta can move this thing and get it working, they think they can get cash flow positive by the end of the year, then good on them.

I think everybody wants that and we don't want to see all these planes back in the market. We want to see them

Tom Lelyo (09:44)

Yeah. mean, at the end of the day, like you said, it comes down to accessibility for private aviation.

more people that can get involved in private aviation, the bigger of a role, the bigger of a voice we as private aviation, business aviation have. And that's going to come down to having a voice, like in the second story we're going to talk about, whether that's just consumers having a voice and what the operators are to do. Or later on when we get into governmental things where does the government invest time, energy, and money in infrastructure for private aviation?

We want more people to have the experience of private

than less so that we have a bigger voice when it comes to these larger conversations.

Jessie Naor (10:20)

Well, that's a great segue to our next story. So FlexJet is hosting a design competition, which I thought was really unique and interesting, but you have a chance to win $100,000 and design the interior of one of their Gulfstream 650s. So Tom, are you going to be getting out your textile skills and figuring out what to put in these things?

Tom Lelyo (10:39)

I'm a big fan of the double stitch, the diamond stitch, I'm sorry, and I'm a big fan of the

Jessie Naor (10:42)

Ha!

yeah.

Tom Lelyo (10:47)

Okay, so it's one thing, so they're called FlexJet, so they got a flex, right? So they have to have a unique, I think that's cool. It's gonna say, compliment, it's nearly 50 custom interiors.

Jessie Naor (10:51)

It's good.

I have a lot.

Tom Lelyo (10:58)

They're going have like 50 of these and they each tell a unique story, is really cool. I think it's interesting to talk about FlexJet doing it and inviting people to do it for their fleet. And I also think it's an interesting conversation when you talk about individuals who decide to air Drake. It's not subtle, but I like it. I really like putting a flavor on an aircraft. It's an asset. Yeah, you can look at resale, but listen, if you're buying a jet, that's your... Have fun with it, man.

Jessie Naor (11:25)

Okay.

Tom Lelyo (11:26)

Let's go, let's have a good time and worry about it later. And just you take the hit. You're like, you know what? This is where I'm going to accept this risk and have fun because you're flying in your own jets. It's good stuff.

Jessie Naor (11:37)

Yeah, well, and that's like the difference here, too. I think it makes a lot of sense. Like if I'm to go out and buy my own aircraft, I'm going to customize the heck out of it and have, you know, the leopard print or whatever it is that I want inside, regardless of, you know,

resale value and, you know, who's going to who's going to buy that aircraft. But I do look at, you know, these fractional companies and FlexJet is different in this aspect. You know, they don't make everything kind of consistent and the same. They do these highly customized interiors and just, you know,

As a fleet operator, would have like, I did the opposite. You know, I went for, let's get as neutral and modern and clean design, everything inside so it looks consistent. The experience is the same, but Flexjet's really gone a different path. And some of theirs I love, and then honestly, some of them I don't like. I think they're like too much, but you know, different strokes

different folks. Maybe I just don't have the taste that those customers do.

Tom Lelyo (12:31)

Yeah. And as long as they can, like you said, on the operational sides, we go with it because you hate to have a golf bag scratch up and tear a piece of leather that is like chartreuse or

that color is and you don't have that color readily available. And now all of the plane's down or something because of the interior design. You hate to see something like that happen.

Jessie Naor (12:52)

Yeah, well, I wonder how much they're going to take that into account, too. It's not just the look, it's the usability of the aircraft over time. I mean, we had a table

a Phenom 300 that we couldn't replace for like eight months because that veneer was out of stock, even though it was, you know, a production stock. And

like, OK, I have to wait a year for a $40,000 table. What are you talking about? But that happens and people don't realize it.

Tom Lelyo (13:15)

Reality is the reality of it.

That's how things happen in aviation. You don't think about when it breaks.

Jessie Naor (13:24)

Mm-hmm. Yeah, and there's some stuff that you just shouldn't customize, too. You know, I feel like the door handles, the things that are going to get used over and over and over again and you need to replace, like unless you have a massive stock of those parts, which who's going to do that? Yeah. Maybe just customize your upholstery that can be replaced relatively easily.

Tom Lelyo (13:44)

have a bunch of stock ones available, so if they have to fix it and it's just like, all right, we're back to beige.

Jessie Naor (13:49)

Yeah, yeah. And I'm a huge fan of runners. Man, you better make sure you have some carpet runners to cover up things, especially if you're going to be chartering out. Make sure it's covered.

All right, and the next story, this is not new, but it is kind of a cap in what's been going on. So Textron out of Wichita, Kansas is not the first. It's one of many that's had labor issues. So the latest strike was with the machinist at Textron, but that has now been, the deal's been ratified. It was 31 % in wage increases over the span of a five-year agreement.

Not new, but actually, you know, slightly less than what I've seen

in some of these pilot deals. You know, some of those were like 40 plus. But it's good for Textron. They can get back to making those $40,000 tables or whatever else it is that they need to put in the aircraft.

Tom Lelyo (14:37)

you

I'm glad that the

is coming to a resolution. It's definitely something that... What I think this story called to mind is the greater ecosystem of aviation. So many people just look at aviation as the owners that get to fly in their bougie private jets and they have all their opinions on that, the one percenters, the environment, yada, yada, yada.

they don't take into account this entire ecosystem that private aviation opens up. It's the pilots, it's the mechanics, it's the people who make the parts, it's the people who put the parts together, it's the people who fix the parts. This entire ecosystem of aviation came to a halt when a part of that ecosystem was like, no, we got to stop for a little bit. I'm glad that it's come into resolution. I imagine they're at least acceptable of

of the conditions that they're getting. But it really, I would like to highlight that grander ecosystem for the listeners that like, thank you for investing your time, your interest and your finances in aviation because you're a part of something bigger that is putting food on the table for a lot of people. And don't lose sight of that, especially if people start to kind of harp on private aviation because

all their own baggage.

Jessie Naor (16:01)

Yeah, that's, know, honestly, look, Textron is one of the few aircraft manufacturers we have left in the United States. know, we need to, this is good, this is moving forward. we do not highlight that enough.

like at our trade shows, I often, like when I went to the Paris Air Show a couple years ago, and it was all supply chain. I mean, it was, you know.

this widget and this doodad and this system. And we have some of that at NBAA but I feel like we are much more focused on the flashy, the Flexjet jet interiors and the bouginess and all that stuff. But we are providing some incredible jobs to people in the United States and other countries that are engaged in this kind of stuff. But yeah, no, that's a really good point that these are the rubber meets the road is what these machinists making those things that keep your airplane moving and functioning.

And they deserve it. I think after inflation over last few years, everyone needs to get back into a reasonable wage at this point.

Tom Lelyo (17:01)

Yes.

Jessie Naor (17:01)

All right, so the next story, we're focusing on e-VTOLs think, you know, obviously this world is still coming into play. We don't know when we're going to really have eVTOLs flying in the sky, but it does seem like there is some traction. For example, Atlantic Aviation this week decided they're going to be installing chargers at their East 34th Street heliport location, which is in Manhattan.

Tom Lelyo (17:15)

Mm-hmm.

Jessie Naor (17:26)

So they've had that location for a while, but with this agreement with New York Development Corporation, they're going to be extending it for another five years. So we were talking about this a little bit in pre-show, and I think it's cool. I love the idea of,

airplanes or eVTOLs flying in and out of Manhattan. But for anyone who's from New York, there's some significant challenges in the electricity there. Like the infrastructure of New York City and Manhattan is pretty

Tom Lelyo (17:42)

Yeah, let's go.

Jessie Naor (17:54)

bad. I think most people don't even have like 240 volt service in their house. Most of it's 208. So I would love to talk to an electrician about like, this, is this going to work? Are we going to get fast charging in Manhattan?

Tom Lelyo (18:04)

Yeah, right. Yeah. And I think,

don't know how fast it takes for these eVTOLs to charge up. If it's something that they maybe don't need the fast charge and the traffic and how much they're going to be using it. If it's like a slow, if this is like a slow ramp up, I think we're probably going to be okay.

But if they're like, yeah, let's put

20 things ready to go, like at a moment's notice, like Uber, yeah, I think you're gonna run into some issues.

Jessie Naor (18:37)

Yeah, I mean, and even today when you look at the helipads there, you have to get in and out. There's not enough room, especially with all the air tours they have going on. You can't just sit there and charge the thing for an hour. They don't have time for that, or if they do, they're going to charge you a significant amount. But I guess maybe they're smaller. But I My experience this summer was I was on a

Tom Lelyo (18:44)

Yeah.

Jessie Naor (18:58)

we were supposed to have 240 volt service, which for this boat, that's what it needed. And the connection was there, but we plugged it in and it's only like 208 volts. I mean, it's a serious issue. And I think some of these fast chargers, some of them need 480 volts, 600 volts, especially if they're talking about the rapid charge to get that thing in and out to do these tours. I don't know. I think it's much more likely they're probably going to be

Tom Lelyo (19:08)

Mm-hmm.

Jessie Naor (19:21)

in New Jersey than they are in Manhattan, but maybe.

Tom Lelyo (19:23)

Bring it on, Jersey will love it. I'm from Jersey, I love it. Let's go, bring him to Jersey.

Jessie Naor (19:25)

Or, well, there was some other news that Newark Airport is going to have these. And I'm like, that makes sense. So maybe it's sitting there waiting for passengers charging.

Tom Lelyo (19:37)

So I yeah. I guess it's up to the pilot to figure that out, huh?

Jessie Naor (19:41)

Yeah, well, they are short hops at least, I guess, you five, 10 minute flights. They shouldn't drain the battery that much. I don't know. It's just still it still seems still seems far away. But everyone keeps saying they're going to start flying in 2025. So I guess we'll see.

Tom Lelyo (19:56)

I love it. love it. I love it. Bring it on. I to look up in the sky and just kind of see these little drone things.

Jessie Naor (20:01)

And actually the FAA is moving on this

well. So they recently, actually this week at NBAA they published the new special federal aviation regulations on powered lift, which was something that was a bit of a debate over the last year. the original rule that they put out there basically said you had to have two controls in the cockpit to do flight training.

and lot of these designs did not have two sets of controls. They only had one. So the FAA did take that into consideration and is modifying how you can train these aircraft versus helicopters and the like. But yeah, I don't know.

you going to be getting in one of these, anytime soon?

Tom Lelyo (20:38)

I would. Yeah. mean, let's go. I'm game. Let's have a good time. And I trust the pilots. mean, sure there's buildings in the way and stuff, but

sure we could figure it out. You know, it's, I don't know. Like you said, it's a short hop and I'm just glad to see, you know, a little bit of flexibility, you know, from a large organization like the FAA. I mean, there's so much that you hear pilots like...

whether it's mental health or medication and all this kind of stuff. And we were just looking for like, help us get to the end goal. And this is showing signs of, yeah, we want to get to the end goal of being able to transport passengers safely in a populated area around buildings. And let's get more qualified pilots in the sky and let's not have this be a problem that the manufacturers have to go back and solve before we can...

you know, take a bridging step. So I do

seeing the FAA move in that direction.

Jessie Naor (21:32)

Yeah, they took into account a lot of people's

I've only gotten through maybe like a third of the rulemaking because it's extensive and highly technical. But there's things like, they're basically trying to adopt some of the helicopter standards versus the airplane standards when it makes sense, allowing more training to happen in a simulator than in the aircraft since some of them only have one control, which is actually, looks like, and again, I have to read.

more deeply into this, but it looks like they're also going to start relaxing some of that simulator requirement also for rotorcraft and airplane potentially. So they're saying training is just as good in this simulator than everyone should be able to train the simulator and not just the eVTOL folks. So at least I think they're

making it fair. Yeah, yeah, and they're trying to be consistent with international rules. I will say and I'm going to quote

Tom Lelyo (22:16)

Yeah, being consistent in the language is good.

Jessie Naor (22:24)

from the

rulemaking. said, consequently, powered lift, or the eVTOLs would not be required to operate at the level of safety required of operations conducted with airplanes, helicopters, or rotorcraft. So they are still kind of lowering the standard a bit to allow this burgeoning market to

But I might wait a little bit until they figure some of this out before I get in one. I don't know.

Tom Lelyo (22:45)

Mm-hmm.

I haven't had a chance to look at them up close and consider it operationally, but

feel like the standards to be a taxi driver is probably a little lower than a bus driver. I can kind of see why all flight is not equal. They're not going to have to be worrying about cross-country.

you know, planning, weather's probably gonna, I would imagine maybe a little bit less of an issue because it's like, like you're around buildings. If it's not VFR, we're not going. Like, you know, I can't see where I'm going. I'm not, I'm not testing this. so I could see why they might, I don't know if I would say lower the standards, but they wouldn't have the

standards.

Jessie Naor (23:36)

Well, in some of it, it's still so open-ended. mean, they're looking at, you know, what

having see and avoid technology, you know, so that the aircraft may be more autonomous and have more safety features built in. So a single pilot in that situation is less risky. You know,

just so hard to say what these things are going to look like when they're done, if they're done.

Tom Lelyo (23:59)

Would you rather fly in a manned an unmanned autonomous, you know, eVTOL You want a pilot or do you the computer better in the city?

Jessie Naor (24:06)

Hey yeah, that's a tough one.

I don't know. I don't know. I mean, that's the thing is when you look at safety reports, look, there is usually operator error, you know, is the cause of a lot of things that go wrong. But there's also operator error in design and function. So, yeah, I can't tell you yet. I guess we'll have to wait and see when we get there.

Tom Lelyo (24:25)

Hmm.

Well, I'm the kind of person that I have the rear backup camera in my car and I still look back. don't trust me to fly. I guess that's why it's taking me so long to get my instrument rating. Trust the instruments they say. I'm looking outside. I can't see anything. So I don't know. It's always that balance, I guess.

Jessie Naor (24:36)

Ha ha!

Yeah, I mean, that's probably true. That's what it will come down to. That's why they

some of these transitioning from a single pilot and then to the autonomous, just so people have that mental stress relief. But I have the same thing. I have the Ford 150 Lightning, the electric truck, and it took me a while to really trust that it was gonna stay in the lane and keep the distance and all the other things. But now I'm just sitting there with my hands all over the place, barely

attention.

Like I got used to it.

Tom Lelyo (25:16)

Yeah, yeah, no, I do agree. I have that on my van. It's much easier to drive that than it is, you know, having to be on it all the

Jessie Naor (25:24)

Yeah, no, but I want to see the statistics on this because I mean, I imagine like all this lane keeping technology. This has got to have some significant impact on safety and especially in

where you're in a pretty sterile environment, relatively speaking. There's not

bobbing and weaving in front of you all the time yet. Yeah, there are birds. The birds are a problem.

Tom Lelyo (25:41)

Yet.

jet packs or pigeons, then we're going to get jet packs and then it's all going to be crazy.

Jessie Naor (25:50)

Yeah, hopefully the pigeons are, you know, small enough for those rotor blades. We'll see. It's the turkeys you got to watch out for.

Well, with that, we're going to wrap up the pod today. Thank you for joining us, Tom. The VIP seat is the fastest way to get your top news on what's happening in private aviation. Don't forget to subscribe to our weekly email digest in the show and click follow wherever you get your podcasts. I'll also throw in

show. I think you live stream on Wednesdays, you said.

Tom Lelyo (26:14)

Yep, we live streams Wednesdays, 10.30 Eastern, and we drop a brand new episode every Friday.

Jessie Naor (26:20)

Awesome. So we will link to that as well so you guys can hear more from Tom and what he's working on. Comments and suggestions on what we

cover next are always welcome. So thank you for being here and we'll see you next time on the VIP seat.