Transcript 0:01 [on-hold music] All right. Good morning and welcome back to the VIP Seat. Today is October 21st. 0:14 We have just gotten back from NBAA, and wow, what a news week. We have so much to cover. 0:20 This episode may be a little bit longer than our typical one, uh, just because there are so many stories and they just keep coming at us. Yeah. It was, uh, it was great to see you, Jessie, in Vegas. It was a lot of fun. 0:31 We tried to coordinate, uh, doing a live taping. Uh, we kind of started coordinating a little too late. 0:37 So if you're out there and you're listening and your company wants to host the VIP Seat at your booth at NBAA BACE 2026, reach out to us now so that we can coordinate. 0:47 Um, and we would, we would love to be there because we were homeless, uh, at NBAA BACE to record an episode. That's actually not true. We did have a home. 0:55 I just had to leave early, and I was ready to get the heck out of Vegas, so, uh, you know, couldn't push the flight back. [chuckles] All right. 1:03 So the biggest story of the show, I think hands down, is it was finally revealed who did the big Bombardier order, and that is the former CEO of JetEdge, Bill Paparella, if I'm saying that right. 1:14 [chuckles] It-- That is, that is how it has been said to me, so I'm going with it. [chuckles] All right, cool. Yeah, so that was a $1.7 billion order from Bombardier. Their stock took a jump right after the news. 1:26 Um, one of the biggest orders we've ever seen in the industry, so it's really exciting. Um, and it's KKR backed, so PE money is back in private aviation. Yeah, no kidding. It was a, uh, it was a big announcement. 1:39 I will say, uh, my speculation was wrong of who it, of who it might be, but honestly, it-- I don't think it was that far off because, uh, kind of a similar founder of a similar era, um, ended up being the one who ordered it. 1:52 And if you remember back a couple of weeks ago, we talked about Aero Ventures, which is Bill Paparella's buying and selling trading platform. 2:00 Um, they had a big announcement for their marketplace, and so now this is another big announcement. So Bill is not enjoying retirement after he sold to VistaJet. 2:11 Uh, instead, he is back at it, and he's gonna double down, and he is quintupling down at this point. I mean, this is, this is big. I mean, and he's taking those aircraft and he's launching a fractional program. 2:22 So kind of a two-part announcement for this story. 2:25 Not only do we now know who the mysterious buyer is, but also there's a new fractional player in town, and the big difference is, is they are 100% fractional, no supplemental charter, no jet cards, just fractional, which I think is pretty impressive. 2:40 Yeah, I mean, I'm very curious to see how the numbers play out because, I mean, look, you know, even fractional companies, it is, it is a utilization game typically. 2:48 You know, you need to get 1,000 to 1,200 hours on these planes per year to make it worth anyone's while. But it seems like he's kind of going after more of the, you know, higher margin, less activity on the aircraft. 3:00 We'll have to see how the numbers work out. But it, it reminds me a lot of, like, how VistaJet started out, 'cause they're just doing, you know, long range, ultra-long range aircraft. 3:08 They're not really going after, you know, the light, the mid, um, not-- more active activity, you know, than they're going after that long haul stuff. Yeah. They're not bringing in the people in the front door. 3:22 They're just saying: Look, you're a flyer. We want you here. Um, they raised-- I'm gonna pull up some stats here 'cause the, the, the kind of numbers around this are, like, mind-boggling. 3:33 Three hundred and twenty million dollars in preferred equity and debt from KKR, uh, which I would assume is probably to fund their progress payments, if I had to assume. 3:45 Um, they're probably going to be, uh, putting their deposits in, and then after they put their deposits in, um, VistaJet's gonna be helping them fund that. 3:53 'Cause the beautiful thing about fractional is, is it's capital light. And so, uh, you're selling off the entire aircraft off to the fractional owners, and then that frees up your credit line to go place the next order. 4:05 Um, so I would imagine that that's what the $320 million is, is used for. If you take 1.7 and $320 million, $320 million not that much money, um, in the grand scheme of things. 4:18 But I think that they're really using that kind of revolving buying power, um, that is the beauty of having a massive order. 4:25 So they can actually drive the price down from Bombardier, um, and then fractionalize these aircraft at whole resale value, uh, and then do it again. So it's, it's super interesting. 4:35 I saw one LinkedIn comment that speculated about kind of Signature's involvement with KKR, and now they can drive pricing. I don't, I don't know if that's how that works. I don't know. What do you think, Jessie? 4:47 No, I, I don't think that's how it works. You'd be surprised there's not as much, um, collaboration between owned PP you know, PE entities as you would think. 4:57 I mean, there's definitely always, like, the will, the desire to do those deals, but it's not always as easy as it sounds 'cause everybody's watching, uh, their own backs and, uh, private equity is just as quickly to take cash out of the company as it is to give it to you, so you have to be pretty careful. 5:11 [chuckles] Yeah, no kidding. Uh, the word synergy is only true when you buy two companies to slap them together, not necessarily if you're both owned in as portfolio companies. So- Mm-hmm... 5:22 uh, big bummer, but I would imagine that probably everybody would appreciate if they use Signature exclusively. It just is gonna depend on who gives them the best deal. 5:31 That's, that's what it's all about and who gets the best fuel price. 5:33 Well, the good news is for the industry though, I mean, fuel prices are, I mean, I think, you know, fuel is below $60 a barrel at this point, so KKR is betting on private aviation having another post-COVID bump. 5:45 Um, I think we've already seen fractional going way up. NetJets is doing well. Flexjet is doing well. So it makes sense. 5:50 Um, and if fuel prices stay low and, um, you know, I guess salaries are gonna stay where they're at, could be tailwinds for the industry.Yeah, I, uh, I wrote an article about the fleet to fractional, and if you look at the data from, like, a hours and a segments and a landing and a expansion, fractional is really the only market segment that's growing right now. 6:12 Um, everything else is either kind of staying flat or has really seen kind of a return to the normal growth trajectory it was on, whereas fractional is kind of outpacing it. So, uh, it's, it's a big bet on fractional. 6:26 Um, different than the other fractional models, right, who are just high utilization, let's throw as much charter in to supplement, you know, the other 20%. 6:34 Maybe you don't sell 20% and you use that 20% of the aircraft for charter. Uh, this is all 100% fractional, but it means that consumers have, uh, more residual value when they go to sell their contract back. 6:45 So that's interesting. 6:45 It's easier to kind of guess what the aircraft's gonna be worth, 'cause, uh, for those of us in transaction world, right, you get a old, uh, you know, you may get an old Wheels Up plane or you may get an old NetJets plane, and it's like, wow, it's way ahead of kind of the fleet average hours. 7:00 These assets will kind of sit in that fleet average hour slot, the 400 to 500 hours a year. Um, and then they're just using the big buying power to kind of drive that price down. So it's interesting. 7:10 I mean, I think it's-- they're gonna have to hyperscale it. They're gonna have to super scale. That's a, the, you know, taking delivery of that many aircraft, like, you gotta get to selling. 7:17 But Bill Paparella has a track record in doing this, which is probably why KKR was cool backing up the dump truck full of money and, uh, giving it to him. 7:27 So, uh, just for a quick, uh, I did a little bit, just a inch level worth of research, just if you don't know who Bill Paparella is. 7:34 He scaled Jet Edge, uh, t- which was just a management charter company, to over 100 aircraft, and then they sold that entity to VistaJet in 2022. 7:44 Once again, my friends, we have some timelines that are lining up beautifully. Uh, three years is an, is a pretty standard non-compete window, uh, and here we are. 7:54 So, uh, not dissimilar to RealJet, um, with Kenny Dichter kind of to the day on the sale from Wheels Up, uh, here we are with another announcement. 8:04 Uh, and I wonder, speculation, I wonder if that's why we had to have the delayed order. Uh, the order was announced, but we couldn't necessarily talk about who it was. I don't know. Total speculation. Total tinfoil hat. 8:16 [chuckles] So, well, that brings us to Mile High Madness, which if you were in Vegas, the whole week was madness. Like, it was just, it was absolutely crazy. Um, lots of events. 8:31 I don't know if I would say that it was packed. I don't know, Jessie, if you felt the same way. It didn't feel-- I- it felt well attended, but not like, "Oh, everybody's here." 8:40 I think last year was probably a little bit more of that, right? You kind of had that post-COVID, like, "Oh, I have to get back out and get to the shows." Mm-hmm. Um, I don't think it had that. 8:49 I think it was kind of at a, what I would call, like, a normal attendance level. I had plenty to do. Um, had plenty of parties to go to and plenty of people to see on the floor. 8:57 But, uh, I wouldn't say that it was like, "Oh, it was packed." Yeah. And I think, I mean, that's kind of the trend. 9:02 There's so many events now, I think it's harder and harder for people to choose, you know, where they're gonna go, when they're gonna go. 9:07 Um, NBAA, uh, you know, full disclosure, they had me on stage, so I'm not being paid to say this at all, but, you know, I think it's, it's just that show that everyone has to go to for the networking side of it. 9:17 But if you don't need the networking or, you know, you wanna do CGI or some of the other ones, you don't have to be there. You know, I think it's a big news show. It's a big networking thing. But yeah, I agree. 9:28 Um, wasn't as, you know, it wasn't packed packed. I did love, I saw a lot more students this year, and actually I saw a lot of people bringing their kids to the show, which I really enjoyed. 9:37 It was kind of, like, nice to, like, see the families of everyone that you've, like, known for years and you know their son or daughter is, like, gonna be a pilot, so they're going to college. 9:46 I just thought that was, that was a nice thing. Yeah. Maybe we could move it from Vegas if we want it to be a little more family-friendly, but that's just me. We're going back next year. 9:56 I personally am tired of being on the West Coast time. I'm an East Coast guy, and eating dinner at midnight my body time is not my favorite thing in the world. Um, but that's neither here nor there. 10:06 Well, speaking of NBAA, uh, we've got Mile High Madness. It was, uh, it was a lot of stuff. I'm going first even though-- And Jessie has no idea what my social media segment is, um, but it is related to NBAA. 10:20 Uh, so I'm gonna pull it up here. I have got, uh, my post. I'm bringing my post to the VIP seat. This is Jessie on stage with some absolute powerhouses, Emily Deaton, Brad Harris, Zipporah Marmer, and Steve Versano. 10:36 Uh, Jessie led a great panel on Wednesday morning, um, and she did a great job, so we're so proud of you, Jessie. Congratulations. We love seeing the VIP seat live on TV or live on stage. 10:49 Um, and it even said underneath her headshot, "Founder of the VIP Seat podcast." So this is my-- It's not mad- it's not madness, but, uh, the VIP seat is climbing the ranks. 11:00 Um, I really did enjoy, I really did enjoy seeing a lot of people. I, I think that this show is resonating with a lot of folks, and that is really cool, uh, to me, and I know that it is to Jessie too. 11:10 So seeing Jessie on stage was really cool. It kind of gives us a little bit of legitimacy here on the show, so we're proud of you, Jessie. Uh- Oh, thank you... that's my Mile High Madness segment. That's awesome. 11:20 Yeah, it was really fun. I mean, it was, you know, some great speakers. 11:23 You know, it's really fun to play the moderator role because all you have to do is kind of set them up for some good questions and go from there, and then try not to offend anyone. 11:29 I try not to, you know, put people on the spot [chuckles] in a live setting. Um, but yeah, great show. Um, and you know, we-- Actually, we have more things coming up too. 11:38 So I'll be speaking at CGI in Miami in a couple weeks. And also, Preston, you're doing something, right? I am. 11:44 I'm speaking at the Main Street Summit in Columbia, Missouri in a couple of weeks, which is why I will have to miss CGI Miami. I'm so sad too. It's one of my favorite shows of the year. Um, and I am, uh, uh... 11:57 So I'm gonna be in Columbia, Missouri while everybody's in Miami. Uh, those are two totally different places on the spectrum. 12:02 Um, but my friend BrettBrent Beshore puts on an event for business owners and, uh, capital investors in Columbia, Missouri. So at Main Street Summit and Capital Camp, I'm giving a talk on Thursday. 12:14 So if for some reason you're going, uh, I wouldn't-- I, I would be surprised if this group skips CJI to come to a small business owner summit. Um, but I'm giving a talk on private aviation. 12:24 It's, uh, it's called The Return on Time Investment-- uh, The Return on Time Invested, um, How Private Aviation Can Help You Buy Your Time Back. 12:32 So, uh, come out if you're, if you're gonna be there, check it out, mainstreetsummit.com. Very nice. That'll be awesome. All right. Well, let's move on to Jessie's Instagram thing for the week. Under technology. 12:46 I just thought, I just thought this was really cute. Again, the animals and the airplanes. 12:51 But it's-- uh, for those who are not watching on YouTube, that don't have the video side, it is this little kitty cat with a little cup of tea and glasses on, and she's sipping her tea, and she's saying, "Me: Hey, boss, I don't think I'll be able to come to work today. 13:03 I took the wrong bus." And the boss says, "What bus did you take?" And she says, "Airbus." [laughs] It's more commercial aviation, but I just can't resist. It was really cute. And also I have- Hey, y-... 13:15 to give a shout-out to Airbus. [laughs] It could be an ACJ, to be clear. Oh, true. It could be-- that, that kitty could have bought the one ACJ that was bought this year, so. That's right. That's right. 13:27 But yeah, no, Air-Airbus, uh, actually, thank you so much. I have to give them a little shout-out because I did get to demo the 160 this week. Wow, what a helicopter. I'll take two. [laughs] Yep. 13:38 Jessie is a, Jessie is our resident helicopter gal, and I am the resident skeptical, so. [laughs] It's a beautiful machine. I gotta say, I mean, it-- f-first of all, it's a very, very, very expensive helicopter. 13:51 Um, I don't know if I'm allowed to say what the price is out loud. Uh, but it's, it, it's getting up there. I can't believe the prices of helicopters these days. 13:57 But just the soundproofing inside of the aircraft weighs almost 2,000 pounds, but that shows you how quiet it is. I mean, you can literally have a conversation. You can whisper to each other. 14:08 You don't feel like you're in a helicopter at all. You feel like you're in an airplane that can also hover at, you know, almost 4,000 feet, which is pretty cool. Yeah. That's pretty cool. That's crazy. 14:18 Um, congratulations on, uh, placing your order. Um, you'll take $1.7 billion with. Uh, just kidding. Yeah, right. Uh, so [laughs] uh, moving on because we have a lot to cover in this show. Um, [laughs] 14:31 Sean Duffy has kind of ruffled some feathers, uh, by calling out some of the, uh, FAA employees and ATC employees that are calling out sick during the government shutdown. 14:44 So he's trying to keep the wheels on, but, uh, but it's, but it's pretty tough. Yeah. So poor Sean, you know. I, I think he's a great person for this job. 14:53 He seems to be very committed, but man, he just can't really catch that many breaks 'cause things just keep happening. Um, the government shutdown is a disaster. Uh, I don't know how this is gonna get resolved. 15:04 I hope it happens soon, 'cause even at Private Aviation Safety Alliance, a whole bunch of databases aren't being updated, like the NTSB and the FAA. I know people are having registration issues. 15:14 Um, but government shutdown is no bueno for government services or anyone working with the government on any kind of services. Yeah. I'm gonna share a post really quick. This is not Mile High Madness. 15:26 This is just a funny. Uh, Chad Gilson from Gilchrist Aviation, "Boo, no one can look up type certificates," with a screenshot of the FAA website. 15:34 Um, and then Jack Gilchrist, uh, says, "It's kind of like they're keeping data hostage until they get their salaries paid. I get it. 15:43 I wouldn't wanna work without getting paid, but I'm trying to figure out what is-- who-- what it is about government shutdown that means the data can't be available anymore, huh?" 15:50 And I said, "I guess the hamsters powering the data centers are also not getting paid." 15:54 Um, [laughs] so it's, uh, it, it's, it's one of those things where unfortunately, during a government shutdown, uh, there's a lot of ancillary services that are no longer accessible. 16:05 I texted Jeff Snowden this morning, um, and he hasn't texted me back yet 'cause he's probably closing a lot of deals. But I was gonna ask him, like, what this means for transaction. 16:13 Like, do transaction services get slowed down now? Like, at what point? 'Cause I know that, like, the first couple of weeks, no big deal. Well, then no one got paid, so it's like s-things became harder. 16:23 And then you start getting air traffic control issues, and then everybody starts feeling it. So I wonder if we're gonna start feeling it in the transaction world. 16:30 It is the worst time of year for that possibly to happen because, um, everybody is trying to close before December 31st, and really, like, December 20th because- Mm-hmm... 16:40 uh, [laughs] because Christmas and, and New Year's on a Wednesday means that basically everything's shut down for a whole week. So it's, uh, I, I don't know. We'll, we'll see what happens. 16:48 We need those people back in the office, so maybe give a little, like, "Hey, we'll, we'll open up one part of the government. We'll pay those people." Uh, maybe just not the rest. I don't know. 16:58 Well, I think there's some things happening in the background that we don't see. 17:01 Um, I talked with a, you know, a big lobbying group last week about it, and, you know, they said, "Look, you know, we've been through a lot of these shutdowns, so, like, we're working on things, and, and off- certain offices are opening, certain things are getting..." 17:14 There's some way that they can allocate funds in certain areas or bring some people in and maybe not pay them for a period of time, and then they get paid when they come back. 17:22 Um, but I've heard that things are going to open even if, you know, we don't get this shutdown resolved. 17:27 But, uh, at least for me, I'm not getting the data that I need, and I'm sure other people are having the same problem. The other issue too is air traffic control. 17:34 Um, a lot of air traffic controllers have been, uh, saying that they're gonna call out sick and just not come in, but Sean Duffy reminded them that that is against the law and that you need to come in. 17:44 It's a safety issue, and anyone found doing that is going to be fired. But it's, uh, it's crazy. Also, the ATC, um, training center, Oklahoma City, you know, they may be running out of funding soon too. So 17:56 the politics is ramping up, and the heat's ramping up. Let's hope they get something done. Yeah. I will say, not a political comment, but the, uh, sombrero mustache... kind of thing is really funny to me. 18:09 If you're on Twitter, uh, JD Vance tweeted about kind of, uh, Hakeem Jeffries in a sombrero and a mustache, and he said, "The somber- the sombrero's gonna grow every day that the government shut down." 18:21 And it's like, [laughs] it's, it's hysterical. I mean, I'm, for- the fact that the Vice President of America is like a meme, is like into memes is hysterical. Like, it's, I like it personally. I think it's funny. 18:33 Regardless of politics, I think that everybody could use a little bit more of poking fun at themselves. [laughs] Just shows you the millennials have officially taken over, and we are the adults now. [laughs] Exactly. 18:45 Exactly. We're gonna have punk rock music as the national anthem next. Um, well, in other news, uh, there is a little bit of a shakeup. 18:54 A Pittsburgh area FBO charter and management company has filed for Chapter 11 bankruptcy protection. Um, so this is in Allegheny County, uh, and the FBO is Corporate Air, which is generic aviation name number six. 19:11 Um, and it started in 1989. Uh, by the time, by, by, by the time that it finally filed Chapter 11, it only had one aircraft left on its certificate. Um, it had rolled off a G4 and a G650 at the end of last year. 19:26 Um, and private equity has come in once again and has bought it up or sponsored it. I don't, I don't know exactly how all of that works from a, you know, asset versus services business. 19:39 Um, but apparently, uh, it's being taken over. Yeah. Well, I imagine these were managed aircraft. 19:46 Um, I don't know that for sure, but that's my, my guesstimate is that it was an FBO that had, you know, a management company. Um, and just you meant to say Chapter 7, not Chapter 11, but close enough. 19:55 I did mean Chapter 7. [laughs] You did mean Chapter 7. Daggumit. Sorry. Which means full- I- sorry. I went, y- yeah, yeah, yeah. Yeah, yeah, yeah. No, I, I, well- Oh, wait, no. I swear... 20:03 yeah, I went, I went down, I went down a... I'm pretty sure it's Chapter 11. [laughs] It is Chapter 11. Wait, is, what is it? Now I'm confusing myself. Verejet. S- it's small business debt relief. 20:14 Verejet did Chapter 7 'cause they have outstanding, um- Oh, okay... loan balan- or they have outstanding, uh, liabilities, so it's not just small bus- Chapter 11 is small business debt protection. Okay. So- All right... 20:28 they're going bankrupt. [laughs] Going bankrupt. They're going bankrupt. Yeah. Yeah. I don't, I don't know what'll happen here. 20:34 Um, by the way, if you search for Corporate Air in my system or any other system, like, good luck, like, figuring out where the heck they're based, [laughs] 'cause there was like seven different companies, but this one was Allegheny County, uh, so I figured it was the same company. 20:49 But yeah, they don't, they only had one aircraft left from the certificate. Um, not really sure what happened. I know that's a competitive airfield. There's other FBOs there, so who really knows? 20:59 Yeah, it's competitive from the FBO standpoint. It's very competitive from the management standpoint. 21:04 I mean, there's a couple of powerhouse, uh, that Kilcarries are in Allegheny County, and they are, uh, kind of the dominant corporate, uh, management company. 21:12 And so, uh, there's, there, I think there's a lot of competition there. I, the thing that I think is interesting is that they couldn't find a buyer before Chapter 11. 21:22 Um, I think that it's just, it, it might just mean that the business, there just wasn't anything left. There might've just, all the customers might have left, and there r- really wasn't much worth buying. Um- Yeah... 21:32 but the group that came in and took over, I did a little bit of digging. Um, Vantage Air, it's actually Vantage, Vantage Aviation, but their website is Vantage Air, so very confusing. 21:43 Um, Vantage Aviation has taken over, and it is run, it is a private equity-backed, uh, FBO roll-up essentially backed by Ryan Maxfield of Jet Access. 21:54 So, um, he knows a thing or two about FBOs and management companies, uh, and they have kind of assumed, uh, I, I, my understanding, I read the AIN article and, and they're assuming the employees, so the employees won't be, have any interruptions or anything like that. 22:10 But, um, so kind of continuing business as usual as kind of the other entity sorts out their stuff in the courts. Um, so business continues. There wasn't anything to buy, but there was something to take over, I guess. 22:24 All right. Well, in positive news, uh, people that are not declaring bankruptcy that are doing mergers and acquisitions, uh, I don't know. Do you, you don't have your gong with you, Preston. How are we gonna gong it? 22:34 I don't. I don't. I wanna give a quick shout-out to Scott Oshman for letting me use a conference room, uh, here at Alliance Airport, Fort Worth, but unfortunately, there's no gong. 22:45 There's a tele- there's a telephone back here. I could, like, get the call for the bullpen, but, uh, not the same as the gong. Also, to be clear, there's a lot of comments about how tiny the gong was. 22:55 Um, and once again, if you'd like to sponsor the gong, you can send me a bigger one. I have heard that there might be a bigger one on the way. 23:02 Um, so the next time that I'm in my home office and we're recording, we'll ring the gong. Um, but there was, there, I, I had a lot of comments on, uh, "Hey, we need to get you a bigger gong." So, I'm sorry. 23:14 It was bigger on Amazon, okay? [laughs] I don't know if you've ever had that happen, but, like- I have... you're like, "Oh, yeah, like, it's, like, that big," and it's like, no, it's like this big. 23:22 [laughs] I think it's a comical gong. I think that's the whole thing. You know, like ting, you know? [laughs] Exactly. Exactly. Yeah. [laughs] Exactly. 23:31 We'll just, if you wanna sponsor it and take over the sponsorship, you just send a larger gong. Yeah. So, like, the gong's just gonna take up my entire office. 23:37 [laughs] But, but you can, like, tape some cash in there too. That's fine. [laughs] Yeah, exactly. Yeah, that's a good point. Anywho, enough about the M&A gong. Let's talk about the M&A. 23:47 Van Allen acquires business aviation consulting specialist, Essex Aviation. So, this is one of the first M&A deals that we've seen in this space in a while, um, probably around what? 24:02 Probably a year, maybe a year and a half- Mm-hmm... since the last time some sort of advisory brokerage type... shop transacted. 24:10 Um, but, uh, Van Allen expanded their business with the acquisition of Essex Aviation, uh, which was a competitor, if you will. And so there's a lot of synergies. 24:18 It adds some capabilities, but a lot of, uh, just integration and, and kind of the merging of two similarly minded, similarly structured companies. Um, and it's very exciting. I mean, it's, it's good news. 24:32 Uh, Van Allen is based kind of close to my house in Peachtree City, uh, Georgia, and, um, yeah, and it, it's exciting to see M&A in specifically in the brokerage space. Yeah. No, for sure. 24:44 This is, this is interesting because I think, you know, Van Allen has positioned themselves, they, uh, not only as, you know, aircraft advisory, buying, selling, uh, inspections, all those things, but they also do executive recruiting. 24:57 I myself have been through one of their interview processes, and I can tell you they're thorough as heck. 25:01 Uh, so I don't know what that says about their recruiting, but I'm just saying it was a, a very, um, good interview process, long interview process. But it's good to see this. It's good to see more activity. 25:12 I think everyone is duly optimistic at the market right now. You know, things are moving, uh, aircraft acquisitions are moving. 25:20 I think charter is the only one that's still kind of lagging a bit, but it still looks like it has some positive signs. We're getting better and better numbers month over month, so that's good. 25:30 We had a little bit of a lull there, and it's time to, to ratchet up. Yeah. I don't think that they're necessarily concerned about charter. 25:37 I mean, they're doing new acquisitions, they're doing staffing, they're doing hiring, they're doing consulting, kind of full soup to nuts. Um, I think this makes, this makes one other powerhouse in this space, right? 25:49 You have Guardian Jet, who's a powerhouse kind of in that s- class, that segment. Um, you have Mente Group, who has existed for a long time in that segment. 25:58 Um, and then you had, you know, Van Allen and Essex, which also, you know, kind of call that the big four players, uh, in, in specifically what they do. 26:07 I'm not saying just transaction world, but I'm saying kind of in the holistic, uh, y- approach, and this kind of combines two of those into one. 26:16 Um, Van Allen's been around for a little bit longer, um, than Essex, so, uh, it's kind of the, the old guard purchasing the new guard. Um, but it's exciting nonetheless to, uh, to see M&A activity in this space. 26:28 I think it's probably a sigh of relief for others in the brokerage space that there's finally an activity that they can say, "Hey, look, you know, this is, this is what happened. This is the outcome." 26:40 Uh, no one's gonna disclose numbers, let's be honest. Uh, but you know, they at least can point to a transaction, a recent transaction and say, "Look, you know, there was one." Yeah. 26:49 Well, and just like a lot of other-- a lot of these types of businesses, you know, it's not like we're probably not gonna get private equity coming in and, you know, rolling up a bunch of like brokerage houses. 27:00 You know, this is all about personal relationships and, and maintaining those relationships. But I do think Van Allen's different in that, you know, they're doing all these different activities. 27:09 They're really a traditional management consulting style company, um, which makes them unique. So we'll see. I, I imagine if there's one, there's probably more coming in the future, so we'll have to keep our eye on them. 27:21 Yeah. I think there's a couple of firms out there that are really trying to, um, push process and systems and then scale, right? So it's how do I push my processes and systems down to the salespeople? 27:32 I won't name them, but I know a few that definitely do a really good job in that. So I think that more on the acquisition brokerage sales side. 27:40 Um, so this is a little bit different in kind of the market segment, but again, I think that's when you can actually become marketable for sale. 27:47 It's not when you're one or two people who does the bulk of the transactions and it's a support team below you. I think that's when you're kind of in the, like, non-transact world. Um, so it's, it's interesting. 27:58 And I, I reached out to Dustin Courtier, uh, about this and just kind of asked what his perspective was, and he said, "Look, two, you know, really solid companies that had prepared themselves for an integration like this." 28:10 And so, you know, I think that it kind of speaks to the, you know, work on your business instead of in your business, and then, you know, good things can happen. Totally. 28:19 You know, you don't wanna just be the, the broker with the relationships. You know, that's not how you scale a large company and sell it if you wanna sell it one day. 28:27 If you want a really good, lucrative job, you know, keep doing what you're doing, but those are the, the different approaches to, to how you run your business. Yeah. 28:35 Well, from-- we're kind of going a little bit of a rollercoaster here on today's show. So we were in, we were in bankruptcy and then M&A, and now we're back in bankruptcy. 28:45 Uh, Very Jet, the, uh, Vision Jet operator has filed Chapter 7 bankruptcy. 28:52 So for all of those attorneys that listen, and I know there's a few of you that are out there, you're currently being like, "Well, explain to us the difference between seven, 11." And to be honest, we don't really know. 29:02 Uh, not our expertise. But there is $10.5 million worth of outstanding Jet cards that are currently not sure what's gonna happen. Yeah. 29:13 I'm gonna say something that probably a lot of people are not gonna like, but that's part of why people come to the show is because I give my honest opinion, even if it's not the common opinion. 29:22 I feel like most Jet cards are just a complete waste of time. I don't know why, you know, and I look at this case exactly and I say, "Here, here goes $10 million just out the door. No one's gonna recover that. 29:35 Maybe they'll recover a little bit of it, but not much." And for what? Like, maybe you got like a 5% to 10% discount on your flights, maybe some- But not even, not even. 29:44 You-- I think over the-- I think if you calculate over the long run, you don't actually save any money. 29:48 Like, if you take flying on Super Bowl weekend and flying on a random Tuesday and average those two things together, like it kind of, it kind of evens out. Um, I agree. 30:00 I mean, I think that if, unless you're with like a big fleet operator, like NetJets and Fletch- Flexjet, you're probably fine. Uh, Wheels Up, because it's backed by Delta, you're probably fine. Mm-hmm. 30:10 Anybody elseUh, you know, it, it, it is enough to where Doug Gollan has a calculator. It's like a loss calculator, and literally you can go in and say, "Here's how much I'm gonna put on the jet card. 30:23 At what point do I kind of break even if the, if the operator goes, like, if, if the operator goes bankrupt?" 30:30 Like, it is enough that there is a calculator out there so you can actually calculate like, "Uh, okay, I'd be cool if 50% of my value got wiped away because if you kind of average it out, it all kind of turns out the same." 30:40 But that's crazy. I mean, that is crazy that, like, so many of these... You have so many of these stories. I mean, you have literally like a laundry list that I can't even name. 30:49 I wrote about it, so if you go to prestonhaalan.com, there's an article that I talk about all of the carnage that has happened in the past when jet card operators go belly up. Um, but it's... 31:00 I, I think I am, I think I agree with you. There's a lot of charter brokers that are out there that use that as a huge selling pitch. Right. I think the only... 31:08 Here's, here's the only two times when I, when I'm advising people, 'cause I get people that reach out to me like, "Should I get this jet card?" There's two way- two times in which jet cards make sense. 31:18 One is that you get decision fatigue. So you say, "I wanna make this choice one time to spend 500 grand, and I don't wanna think about should I take this charter or not?" It's useful for that. 31:30 Two, if you have some sort of a tax, like if you're on a cash accrual basis, not tax advice to be clear, if you're on a cash accrual basis, there can be some benefits to buying the jet card in a certain calendar year and using it in a s- different calendar year. 31:45 I don't know exactly what those are 'cause I'm not a tax expert, but I know that there is some of that. That's the only two reasons in my opinion that... Or, okay, sorry, three. 31:54 Third reason is that you don't wanna buy fractional at NetJets or Flexjet, and you're okay with all of the blackout limitations, and you're like, "I wanna fly on that product, and I wanna know who, you know, know all of the processes and systems and not kind of be, you know, in the wind." 32:09 But, uh, in my opinion, those are the only three times. Yeah, I mean, you'd, you'd have to have a lot of benefits. You know, for me personally, I mean, 32:17 I- it just doesn't-- There's so many of these players out here, and there's also so many people who want to charter you. And I have to say, like right now, the charter market is not like completely packed. 32:26 Now, holidays are a different thing. So I mean, if you have to travel on certain, certain peak days and you need that absolutely, then yeah, maybe you have to have a jet card to access some of that. 32:36 But at the end of the day, like, you know, you should be asking for some sort of financials. 32:42 You know, I don't know if the company's gonna give you full financials or not, but some sort of like understanding of, you know, how the health of the company is going. Uh, funds in escrow really is a good practice. 32:52 A lot of people don't do it. I don't know why. Um, but I would want my funds in escrow, um, if I was gonna be putting especially like half a million dollars or something like that. 33:00 It's one thing if you're doing, you know, $100,000 and you're blowing through that money really fast. 33:03 But when we're talking about big, big dollar amounts, you know, you've got to protect yourself 'cause you just don't know where any of these companies are going right now. Yeah. 33:11 Warren Buffett says that the greatest business on earth is those that have float, which means that you can make money on other people's money. Insurance companies are like this. Engine programs are like this, newsflash. 33:23 Uh, jet card com- jet card is exactly the same. Bridges are like those, yes. You're, yeah, you're, you're, you're letting the other guy keep your 500,000 and make 4%, hopefully only 4%, right? 33:36 If they're making like 12%, they're a little too risky with your funds. Mm-hmm. Um, and then you aren't. So you're letting them do it for some sort of discount, which I don't think really exists. 33:47 But, uh, back to the story, just really quick to wrap up some other loose ends. Uh, the founder of Very Jet unfortunately died a couple of weeks ago in a mountain biking accident. 33:56 Um, so our thoughts and prayers are with his family. So I think that's probably part of what triggered a lot of this. 34:02 I know that Very Jet was trying to kind of rebrand themselves and recapitalize and kind of go into more of the organ transplant business. 34:11 Um, but it's never good when one of these businesses goes bankrupt because it looks bad on the whole industry, uh, and people become a little bit more flinchy and a little bit more, uh, less trusting of those people that are, you know, doing the right thing. 34:26 Yeah. They had $38 million in debt, and I'm like, how the heck did they even get, you know, that stretched? But I can't speculate. I wasn't in the business. I don't know what they were doing. 34:37 Uh, but I will say that's a tough one. I mean, the Vision Jet is not, um, it's not a high margin asset. It's not flying as long of legs to get, you know, the numbers that you need. 34:49 So I, I imagine that's a hard model in the first place. And then you lose your founder, uh, you know, what, what can you do at that point? Yeah, exactly. 34:57 Well, they've had, they've had a whole lot of problems with, uh, in... [chuckles] They've had a lo- this is not the first problem. I mean, there's, there's a lot of lawsuits that are out there, uh, as well. 35:08 So I think that this is kind of, uh, you know, kind of taking care of that. 35:12 So, um, thoughts and prayers are with your f- with the family, um, of the founder and, uh, yeah, it's, uh, it's, it's a sad day when, when there's another bankruptcy. 35:22 And when our show is dominated by two bankruptcies, that's a big bummer. Um, [chuckles] so- On the back of a lot of other really big- Yeah, that's exactly right. That's exactly right. That's exactly right. Um, so yeah. 35:35 So, uh, moving on to something that is very pertinent in your world, Jesse. Uh- Yes... Argus has updated, upgraded? 35:43 Updated, uh, the gold level audit standards for, for their, uh, s- for their certification.Yeah, I mean, I know this is incredibly sexy news, you know, the, the, our safety auditing firm changing their standards. 35:56 [both laughing] Um, but it is actually pretty interesting because I think, you know, there's always this debate in, in this space whether or not the safety audits make a difference in you choosing a safer operator. 36:09 Like, is an ARGUS Gold, Platinum, or a Wyvern any safer than anybody else? 36:14 And there's this constant debate going on, and I think a lot of people have had a debate for ARGUS Gold specifically and Wyvern's entry level, which I don't remember what it is, and I'm sorry, Wyvern. 36:24 Um, but the Gold level traditionally just meant they verified that you were indeed an operator that was, you know, legally allowed to fly. You could upload your pilot information. 36:34 Upload, you know, they didn't verify it, just you- they upload the credentials. I think they verified that they are indeed a pilot, you know, in the system. 36:41 Um, but now what they're doing is layering in, you know, making sure there's an SMS in place, an emergency response plan, um, training manuals, documents. A lot more is going into the audit now. 36:53 It used to be ARGUS Gold just meant boom, you've put your information into this database. 36:58 Now it seems like they're actually making this more of an audit, which I appreciate because I think everybody before was like, "Okay, it's ARGUS Gold. Like, who cares? 37:05 That just means you put-- you paid them X amount of dollars to put your name in the system." But now there's actually some real auditing component to it. 37:14 So I think that- that's cool, and I think it bringing those standards up makes sense because why would you have, you know, a stamp for Gold and a stamp for Platinum when the two are so entirely different in terms of what they do? 37:26 Yeah. When basically Platinum's all anybody cares about, and Gold, if you're in the industry, and even a lot of flyers were kind of like, "Eh." Like, you might as well not. 37:36 So, uh, so yeah, I think that's super interesting. And, uh, having upping the Gold standard definitely makes it to where you're not just having this throwaway, uh, auditing. 37:49 But, uh, I think it's important for there to be a lot of different auditing, uh, services because consumers really want this, and they want to feel confident when they fly private. All right. 38:04 So, uh, I know we covered this multiple times, um, but now Jared Isaacman is back in the news. 38:11 There was this, you know, little thing that happened between Elon Musk and Trump, and we were kind of speculating that maybe it had something to do with, like, Trump giving Jared the boot. 38:22 But now Jared's back in the picture, and it seems like he might actually become NASA administrator, which honestly, he's the best fit ever for the role. 38:29 Um, so I hope, really, really hope it does happen, and maybe this is also a sign that Elon and Trump are now gonna be like best buddies again. Who knows? Yeah. 38:38 I think, uh, maybe one of the qualifications for NASA administrator is you have to go to space. 38:46 I think that that would probably be a pretty good qualification for NASA administrator, so maybe you can actually, you know, say, "Look, this is a, uh, uh, this is what my experience says," right? 38:59 Nothing says experience like I've been there, done that, and rookie has. So congrats maybe, Jared. Hopefully, hopefully you can get-- Hopefully we get you across the finish line. 39:10 We here at "The VIP Seat" are rooting for you, not that it matters, this is not an elected position, so, uh, we are stoked for that. But, uh, yeah. So super excited for that. 39:20 Well, this brings us to the end of "The VIP Seat." So what does that mean? It means that we need your help to help grow this show. 39:31 We need you to hit the little share button at the top right or the bottom right of whatever podcast player that you're listening to. We need you to send it to your friends. Maybe send it to two friends. 39:40 Send it to a, a few colleagues, because that's the best way for us to grow this show. We're currently the number two most listened to business aviation podcast out there, and only you can help us get to number one. 39:52 So help us do that. 39:53 Go sign up for the newsletter at thevipseat.com, where we give you this newsletter in a diges- or we give you this podcast in a digestible newsletter that comes to your inbox every Tuesday or Wednesday-ish morning, um, before you get to work, so that you can be more educated and understand what's going on in the world of business aviation. 40:12 Leave us a five-star review because it's the only way that you can get the message that you wanna say out there, uh, by leaving us a five-star review. And until next week, I'm Preston Hollyman. That's Jessi Meerhammer. 40:24 We'll see you next week. [upbeat music]
