Bloomberg Businessweek Weekend: May 22nd, 2026

21:35Carol Massar:And I think today they are potentially buying out the beers or a part of it. So maybe it's not a bad thing for anyone. The world needs to diversify and the economy of each country needs to diversify. I want to talk a little about what took so long technologically for us to get here because, I mean, you know, it was almost like I got engaged a decade ago at this point and this wasn't even a thing. Like lab-grown diamonds were not even part of the conversation. I talked to young people today and it's like... For your wife to be or just Were they around? So the lab-grown diamond have been around since after the war in 1950.

22:09Carol Massar:They were actually made the first. But they weren't really. It was not prevalent. So out of the diamond market, lab-grown diamond was 1 % of the market in 2015. Yeah, that's fair. Yeah, 5 % of the market in 2021, 40 % last year, 70 % of the engagement ring of the U.S. today are lab-grown diamond. and The Economist is expecting it to be 75 % by 2030. I actually think it will be faster than that. Yeah, so illustrating my point perfectly. Why was it such hockey stick growth and why for so many years was it under the radar? Well, the reality is the mine industry has been dominating the industry, the diamond industry for 100 years and have done an amazing exercise of marketing with the beers.

22:55Carol Massar:First of all, telling us that the diamond is rare. Diamonds are not rare. The reality is there is enough diamonds in the world so that 8 billion people can each have alpha carat each, and you will still be having hundreds of thousands of them being hidden somewhere. So the reality is a diamond is not rare, but they've done a beautiful marketing exercise in order to promote it that way. Why are diamonds still, though, then so expensive? Like if so many people are choosing for engagement rings to do lab-grown diamonds. I mean, the lab-grown diamonds that I've seen have not been expensive relative to a mine diamonds.

23:29Carol Massar:What's the cost differential? Yeah. Percentage? The difference of price is approximately 70 % between a lab-grown diamond and a mine diamond. 70 % cheap, less expensive. Yeah. Lab-grown diamonds are cheaper at 70%. First, it costs less to make them. You don't have to extract everything from the planet. You don't have anything. But you know, the real question today is actually the resale value. The biggest, I will say, problems between lab and mine diamond is they should work together. They should work together instead of fighting. the biggest critics that mine diamond gives to lab-grown diamond is oh there is no resale value and i always say yes obviously you may have no resale value but there is a resale value to everything so let me give you an example just got about 25 seconds if you get two carats of lab-grown diamond today you'll probably in decolor which is the high end what we do it probably will be six thousand dollars the same equivalent in mine will be sixty thousand dollars By the time you leave the shop, you've already lost$30 ,000.

24:26Carol Massar:So personally, even if I lose everything, I know what I want to buy. Our thanks to Natalie Morrison, the founder of Astria London. From the brilliance of diamonds to luxury in the skies, we're talking private aviation. Wheels Up recently announced that its lead investor group, headed by Delta Airlines, has agreed to provide a new$100 million term loan to support the company's growth strategy. For more on the business, we caught up with George Mattson, the CEO of the$260 million market cap private aviation company Wheels Up. He's also a former board member of Delta. So we've been on this transformation journey for about two and a half years now since the Delta-led investment in October of 2023, at which time I stepped off the board of Delta.

25:06You mentioned I was on the board to run the company. And the idea behind that investment and our go-to-market strategy from then forward through today and beyond really lies in a unique proposition that we think we are exclusively trying to deliver to our customers in private aviation. This idea of a solutions platform or a solutions toolkit spanning across premium commercial through our partnership with Delta and private aviation on a flight by flight basis. So whether you're a member of Wheels Up, and we're proud to have 3 ,000 members of our programmatic offering here in the United States or you're a customer who accesses private aviation through our leading global charter business.

25:49The idea is to provide the right plane for the next flight, not for every flight, as some of the other models in the industry do. And so we're two and a half years into this transformation. The first quarter was a very consequential quarter for us because we hit a couple of very important milestones. We announced about a year and a half ago that we were going to be replacing our entire jet fleet by the end of 2027. We, in fact, finished that a year and a half early and are now completely out of our legacy aircraft types and into the two fleets of the future for us, the Phenom 300 and the Challenger 300, which have been performing as expected.

26:23And so we're very pleased with that. We also have sunsetted our legacy memberships that were supported by those fleets and are now exclusively offering to our customers memberships underpinned by those Phenom and Challenger aircraft. So no more King Airs, for example? Well, we're still flying King Air. It's a much smaller part of our mix going forward. But again, we can offer any customer, any aircraft, whether it's a King Air, a helicopter, a seaplane or a global 7500 to take them around the world. Our business consists of two parts. And obviously, the part we're best known for the original business is our membership business.

26:58And that's half our half our company. But the other half is this global charter business, which enables us to provide customers the right aircraft for the right mission for their next trip. And by the way, if that's a commercial need, if you're flying from New York to Atlanta and there's a bunch of Delta flights, we, of course, are happy to see our joint customers flying on Delta. And when they need us for a particular trip, whether it's on fleet or through our global charter business, we want to be there to provide the right solution for that mission. Why did you transition from those older Citation 10 and Hawker aircraft to the Phenoms and Challengers?

27:33Wouldn't it have been cheaper to just keep the older aircraft? Or was the maintenance getting so high that it was more expensive to carry those? Yeah, many of those aircraft were no longer in production. And the reliability of those aircraft were not at a scale and a level that were appropriate for the kind of operation we want to run. One of the very first things we said when we started this journey, day one, was we want to be the best run private aviation company in the industry. That we were going to follow the Delta playbook to do that. We moved the headquarters of the company day one from the sales office, if you will, in New York to the operations center in Atlanta, which is where we're all based.

28:10Leadership is based where we run the company out of. And we've been on an operational turnaround journey as well. You know, we publish our operational stats every quarter. We're the only private aviation company to do that. And we're hitting the cover off the ball operationally. You know, we're running it over ninety nine percent completion. Half our days have no cancellations. We're running it over ninety two percent on time. We have 14 days in a row to start this year without a single cancellation across over a thousand flights. That wouldn't have been possible two years ago, and it wouldn't have been possible on our legacy fleet either.

28:41These new aircraft that we're flying are much more reliable. Maintenance availability is higher. Utilities higher. Efficiency is higher. Unit economics of the fleet are very different.

28:51Carol Massar:What about Delta, though, and that relationship? Will they need to continue to be pumping cash into you guys? The cash we raised in this quarter funds our growth plan well into the future. You know, it's a little bit of a function of how fast we grow. We are returning to growth again. You know, underneath our relatively flat revenue performance for the quarter is another story. You know, we doubled our Phenom and Challenger revenue while offsetting that with the kind of expected orderly wind down of our legacy flight activities. And so, you know, when we look at the profitability of these aircraft, the unit economic profitability, we see the business model becoming self-sustaining.

29:32So we don't expect to need to, as you said, pump a whole bunch of additional cash into the business going forward. Hey, George, on the Delta partnership, I'm just curious what that pipeline looks like from flying on Delta, known for a premium product, to then spending a lot more money to fly private. What does that pipeline look like? Yeah. So look, what captivated Delta's interest in this and what we've really been driving toward is this idea that private aviation, when delivered in the appropriate way, is an integrated extension of a premium commercial strategy. That as Delta has gone on its premium journey, Wheels Up is a core part of that journey for its corporate and high value customers who access both modes of aviation.

30:21This idea of creating access to private aviation when you need it integrated into a broader relationship that spans across commercial and private. And so whether we're talking to Delta's 45 ,000 corporate customers or that subset of their 20 million strong SkyMiles member base, so half a percent of 20 million people is obviously a lot of people, it's 100 ,000 people. You know, these are the folks that we're going to together, joint marketing, ultimately joint digital integration, merchandising and so forth. So that's the plan that we're executing. So what portion of signature members come over from Delta?

30:55What percentage? Yeah. So when we started this journey, the vast majority of our membership was a leisure membership base. We're now close to 50-50 in terms of leisure and corporate members. And that is kind of an optimal mix, right? You want your aircraft flying with your corporate members during the week and with your leisure members during the week ends and during holiday periods. And so this idea of smoothing demand through the week and through the year is an important part of our strategy as well. But corporate has been our fastest growing segment. We've run corporate at 25 % a year since we started this journey, largely, well, to a very significant extent, through our collaboration with Delta.

31:35And Charter has also been growing at double digits throughout all of this. And this idea of delivering global solutions is resonating and very different than I think the narrative we hear from some of the other folks.

31:44Carol Massar:So you know Bloomberg loves numbers, so I have to just ask you. So can you give us a percentage of what portion of signature members are coming over from Delta? Can you give us any kind of number? Sure. So we are, today we have over 800. We launched the signature membership in September. We crossed over 800 members at the end of the quarter. So about a third of our total members are now signature members, with the legacy members converting over every day. and right around just over a third of those members are corporate members today. Go ahead, Carol. We have, you know, we love talking about this space.

32:23Carol Massar:External risks. What worries you the most? Fuel costs, regulation, economic slowdown at this point. I mean, and you can throw in what demand looks like. We only got about 35 seconds. Sure. Look, demand remains very strong. Obviously, fuel is a significant input cost. We're somewhat immunized from that through the ability to charge surcharges to our customers. We haven't seen a significant change or any real change in demand since fuel spiked on the back of geopolitical activities. The ultimate, I'd say, headwind to our business is always the macroeconomic environment and where markets sit. And obviously with markets at all time highs, people are flying along.

32:58That's George Mattson, CEO of Wheels Up. Still ahead on Bloomberg Businessweek, we double down on private aviation. Sentient Jet President Alan Walsh joins us next on What's Driving Today's Flyers. We have 6 ,700 car owners within our community. And the demographic ranges right now from, obviously, personal travel, personal aviation, right down to some corporate travel. And the changes that you mentioned, we're seeing two, I think, kind of demographic changes, which is getting younger. But secondarily, the other change that we're seeing as well is multi-generational family trips. Don't go away.

33:34This is Bloomberg.

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35:58With Okta, you'll turn risk into opportunity. Secure every agent. Secure any agent. Okta secures AI. This is the Bloomberg Business Week Daily Podcast. Listen live each weekday starting at 2 p.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say, Alexa, play Bloomberg 1130. Our Bloomberg Intelligence team out with a note recently that reminded us that private aviation surged during the pandemic. Yet this could ebb with slowing economies and higher fuel prices due to the Iran war. It's a trend that could disrupt market plans for charter and fractional operators and prompt some to shrink or exit the market.

36:43Yet others say that higher income travelers are still willing to pay a premium to protect their time and bypass commercial airport chaos, especially as we head into the busy Memorial Day weekend. Alan Walsh can tell us more. He's president of Sentient Jet, which is known for its jet card. It offers customers a fixed number of hours of private jet travel. First of all, Carl, Tim, thanks for having me. I really appreciate it. Good to see you again. You know, from our side, being here for over 25 years and 6 ,700 card owners in our community, it's something from our specialists we constantly look at as well.

37:18So overall fuel, I'm going to say right now, not really having material impact. Are you passing on the additional cost in the form of fuel surcharges? Exactly. So we look at that on a monthly basis. And as I said, for us, it's just a straight pass through. It's not something that we look at. It's not leading to demand destruction? It's not. It's not. If I actually look at it, Tim, in April of this year, private aviation flying in North America is actually up 11 % year over year and globally 5 % year over year. So, yeah, not right now, not having an impact. You think it's up because last year during April was the tariff meltdown in the equity market?

37:59And I know this is so tied to the equity markets because if people feel, you know, they look at a statement, they feel incredibly wealthy. They say, OK, I could justify, you know, a couple hours on the private jet here rather than flying economy. Yeah, you know, there's always external factors for sure. That would have been one. I mean, obviously what we're seeing right now in the Middle East is another one. and then the knock-on impact of commercial flying. You know, tongue-in-cheek comment is commercial flying right now is probably the best advert for private aviation because it does become that reliable alternative for sure with everything that we're seeing.

38:31You know, basically people are buying and manipulating their time by using private aviation. So certainly as I said, you know, there's cyclical factors right now. This is one, yeah.

38:41Carol Massar:So who's off-flying? You know, remind us about your demographic and kind of if those trends remain consistent. in? Yeah, so thanks, Carl. So as I said, we have 6 ,700 card owners within our community, and the demographic ranges right now from, obviously, personal travel, personal aviation, right down to some corporate travel. And the changes that you mentioned, we're seeing two, I think, kind of demographic changes, which is getting younger, certainly into kind of like mid to late 40s. But secondarily, the other change that we're seeing as well is multi-generational family trips. You know, I think post-COVID, what we certainly saw was people doing that revenge travel aspect of it kind of hasn't slowed down in that regard.

39:25The experiential part of it is certainly top of mind for folks now. And, you know, we see it manifest, especially during the seasons, the seasonality and the peak travel seasons through, you know, I said, once a generation, bigger, further travel. Can you remind everybody about the relationship that you have with FlexJet and, you know, the parent company, Directional Aviation Capital, like how that structure works and if you're using each other's aircraft? Sure. Thanks. So, yes, we are part of the Directional Aviation family. I will say we very define swimlines, though, that we don't really cross over on.

40:04You know, sister company FX Air is very firmly rooted in the charter market, sentient very much in the jet card market where we have our own operator network. that we stringently and rigorously control to our safety program, we probably use about 35 % of the available network of operators across the U.S. Whereas Flex, obviously, very much in its own swim lane with its own assets that are fully focused on the fraction and the lease business. So would you ever use Flex's assets? You know, not necessarily. Because those jets are owned by the FlexJet customers, right? That is correct. as I said, you know, it's different brands within the global brand.

40:45So it came on my radar last year because El Catterton, the private equity firm backed by Bernard Arnault, the French billionaire, led an$800 million equity investment in Flexjet. You don't see any of that money. That's a completely separate business? It is a completely separate business. And I think there's a much longer term strategy there with the Flexjet business, I should say. So, you know, from Ascension side, even though we're part of the same family, I think that's firmly rooted in the Flexjet space. You know, and we see that manifest over the next couple of years. OK.

41:18Carol Massar:What's the benefit of having them all, you know, as invest, you know, as directional, as investors investing in all these different properties? What's the advantage that you get being under this umbrella? So that's a really good question. So I think from our side, Carol, it's like this. When we come across any type of a prospect into the private aviation world, part of our role is being consultative. And entry into that is we'll have that conversation around, what's the problem you're trying to fix? What's the solution? What's the right solution for you? And what we'll do is work on that solution with you.

41:50So in some cases, it could be fractional. Some cases, it's jet card. Some cases, it could be charter. For us coming together as global brands, what it really allows you is we have the right solution for you. And as your needs over time scale up or scale down, depending on your personal business situations, you can move within the family throughout. So it certainly provides the one-stop shop. That's really advantageous because, you know, we know each other's brands pretty intimately and we guide you in the right direction.

42:19Carol Massar:No infighting? You know how that is. You know, wanting to be the favorite child. Yeah. Healthy coopetition. That's probably the best way to say it, right? there's always a sure i think there's some some healthy competition but ultimately you know what it makes us all better um because we learn from what each other is doing but yeah of course we wouldn't be enough if we were somewhat competitive alan it's a it's a special aviation day for us because we spoke with uh george mattson over at wheels up the ceo of the company and i'm breaking like a cardinal rule here i'm asking you to weigh in on a competitor but you know it's wheels up is a publicly traded company and has been for some time and the stock has just gotten hammered and And the company has had its share of challenges, which have been publicly documented.

43:02And it's in the midst of a turnaround right now. Just from a strategy perspective, I'm curious about your view. Why that strategy hasn't necessarily worked out? Yeah, that's a great comment. For me, I'd look at that when Tim and I'd just say the way they run their businesses is certainly it works for wheels up. They're doing what they need to do. I think ours, when we look at it, is really coming from very much a position of financial strength across the brands, which is very deliberate. So, you know, I think, George, they're working through their plan. We're working through our plan. And that was just probably the way it is.

43:41Well, how do you see sort of the value proposition that you offer customers? And to borrow a phrase that you used earlier, like your swim lane versus their swim lane and sort of where they overlap and where they don't overlap? Because at the end of the day, I think it's fair to say you are going after similar demographic. We are. We are. I know, you know, our swim lane is really looking at the reliability, the consistency, the guaranteed availability. You know, when we look at what we're doing is our own dependability. You know, we've consistently delivered that for over 25 years. That's why we've got such a high loyalty, you know, within our cardholder community.

44:19They know what we're going to deliver. We're there for them 24 hours a day from a service standpoint and an experience standpoint. But really what we're giving them is that reliability and the confidence that we're there. We're speaking with Alan Walsh, president of Sentient Jet, joining us from Quincy, Massachusetts.

44:35Carol Massar:Well, you know, it's interesting just going back to, you know, Tim saying, OK, we don't like to ask you about a competitor we just had on. But having said that, you know, they've been doing some capital raises. Is also being part of this larger company that when you do need capital, it's easier to access? Well, yeah, I mean, if you look at the financial position, I think of the directional aviation group, it's been in a very, very, very strong and healthy financial situation forever. You know, there's never been that time where there's been that type of a constraint. I think if you look at the overall strategy on it, Carl, you know, it's really based on that is what's going to work, what's best, how do we optimize it, but also take advantage of, you know, the confidence of the financial situation.

45:18the company is is run strategically on that it's worked on making sure that we hit our financial targets it may hit where exceed our financial targets and never really compromise it in any way

45:29Carol Massar:one thing i'm curious about and just talking with our george ferguson who covers all the majors and um and the aerospace uh sector overall and it's a story we've talked about um alan i feel like over the last couple years a shortage of pilots can you guys get all the pilots that you need? Yes. I mean, if when I look at again, so the way we work in this car, we have an operator network that we do business with, you know, the pilot, you know, we have, I suppose, contracts with them, they will actually go and source all of the pilots. It's not been a challenge. I mean, certainly, we have people that move back and forth between the airlines for sure.

46:06But right now, I'm going to say, you know, it's not a major challenge, the operators and the contracts and relationships that we have give us what we need in terms of availability it hasn't come up as a concern uh alan back to the relationship with with your your sister company flex if we think about their swim lane would that would would somebody like sentient jet would be like a entry level or like a you know gateway drug to private aviation for lack of a better term and then And once they're hooked on it, maybe they make more money, maybe they have a big exit, then would they move to flex? Because that would actually include fractional ownership and that's actually a more expensive product.

46:50It's a great question. And I suppose help explain the swim lane a bit more. We look at it and certainly people's needs do change them for sure over time where they can scale up and they can scale down. But if you look at it in terms of the hours that you typically use in a year, you know, the jet card fits right in that swim lane of somebody that's flying between 25 and 75 hours per year. If you scale up beyond that and your needs change and you're in, you know, 100 hours plus a year, depending on what your personal needs are, then fraction is the right, certainly is the right fit for you in that regard.

47:21Because, you know, it's going to give you the economies of scale there for sure. So, you know, again, I go back to us being the consultative mode is if we see somebody that's graduating into that swim lane. Yeah, by all means, we make sure that we broker and bridge the relationship so that they can scale.

47:37Carol Massar:All right. You mentioned that your demographic is getting younger, mid to late 40s. Just tell me, has Tim taken a ride on your plane? Highly confidential segment. It's just between us. That's part of it. That was Alan Walsh, president of Sentient Jet. And that wraps up the weekend edition of Bloomberg Business Week from Bloomberg Radio. Thank you so much for joining us. Be sure to tune into Bloomberg Business Week daily, Monday through Friday, starting at 2 p.m. Wall Street time on Bloomberg Radio, Bloomberg TV, and on Sirius XM channel 121. You can also watch our daily broadcast on YouTube. Just search Bloomberg Podcasts.

48:10We're also simulcast on Bloomberg Originals, available at Bloomberg.com slash originals and streaming platforms like Roku, Amazon Fire TV, Samsung TV Plus, and more. Find our Bloomberg Business Week podcast at Bloomberg.com, Apple, or wherever you get your podcasts. And the latest edition of the magazine is available on newsstands now at Bloomberg.com and always on the Bloomberg Terminal. I'm Tim Stanovic. Carol will be back next week. Have a good and safe Memorial Day weekend, everyone. This is the Bloomberg Business Week Daily Podcast. Available on Apple, Spotify, and anywhere else you get your podcasts.

48:44Listen live weekday afternoons from 2 to 5 p.m. Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal.

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51:10Carol Massar:for any business. That's genius.