VistaJet US President Leona Qi on Global Private Jet Expansion

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1:14Carol Massar:Bloomberg Audio Studios, podcasts, radio, news. You're listening to Bloomberg Business Week with Carol Masser and Tim Stenevek on Bloomberg Radio. Demand for private aviation just surging right now. Our Bloomberg News team reporting just last month that the Canadian business jet maker Bombardier wants to expand its manufacturing and maintenance capabilities. His demand surpasses expectations and acquisitions may be part of the strategy. Bombardier announced in January that it would build a new manufacturing center near Montreal to boost production, mainly for its smaller Challenger models. Leona Key understands the supply and demand when it comes to private aviation.

1:55She's president of VistaJet US. She joins us here in the Bloomberg Interactive Brokers Studio. I love talking aviation and planes. Nobody will be surprised by that if they listen or watch us regularly. We do speak to a lot of folks in private aviation. There are a lot of different models in private aviation, whether it's fractional ownership, whether it's the jet card. Where does VistaJet fall on that spectrum? So we're kind of unique in that way. We own our entire assets. We have close to 300 aircraft fleet and growing. Our flagship model is subscription-based. People buy a number of hours per year.

2:33And in return, what we're guaranteeing our members around the world is guaranteed availability on our fleet. within 24-hour notice in the United States and in Europe and 48-hour notice for international flights. Where are you seeing demand come from right now within the U.S. and globally? Within the United States. So United States traditionally and right now is still the biggest market in private aviation. The demand is literally everywhere. The wealth creation is really fast. As you guys probably know, we're reporting all the IPOs, the creation of multimillionaires. there's a lot of demands from the west coast and there's energy sector and obviously financial sectors the banks everybody's doing so well we've never seen demand demand this strong specifically in the last two years internationally there's a lot of new corridors asia china africa demand we actually did a report with night frank last year to see where people are flying so there's a lot of new corridors between Middle East, Asia Pacific, Africa, China.

3:40Within Asia Pacific, we've seen demand of 63 % between Hong Kong and Tokyo.

3:46Carol Massar:So who is driving this growth and this demand? Is it still primarily the ultra-wealthy or has the private flyer changed? I know you all mentioned that nearly half of first-time private flyers are now under 45 years old. Yeah, there's definitely, there's traditional flyers, there's the next generation flyers, there's definitely a generational shift where traditionally people really want to own the assets, right? I think a lot of people still see flying private as a luxury. But the next generation, I would say people under 45 or the tech industry, people that just created wealth, really see it as a business tool.

4:22It's really a time machine where a lot of times we see family offices, the advisors and financial advisors want to go in and they advise their clients. private aviation or general aviation, business aviation really is not in the bucket of a luxury purchase like a supercar or a yacht, rather is a management tool for productivity and mobility. Are you seeing it more used for the growth? Are you seeing it more used for leisure and family travel versus corporate? We have, so our customer base, we're seeing half about split in the middle, 50 % for corporate travel, the other 50 % is really owned by entrepreneurs.

5:05And I think in that side, the demand is really, what they're using it for is really blended because that's your entrepreneur's, your billionaire's lifestyle. So people are traveling for, you could say it's for work, but they're managing their assets, their real estate, their business across continents. So they're really also traveling for family as well. Their family is very much part of the lifestyle. What's just so fascinating about the level of wealth needed to do this is the difference between a domestic hour versus like an international hour. Like, you know, we hear about folks who say, OK, well, we'll travel private within the U.S., but it's just a completely different game to travel internationally on a private jet.

5:50What's sort of the cost differential there? I mean, you even have like incredibly famous examples of incredibly famous and wealthy individuals who won't fly international private because it is too expensive. Correct. So there is a cost difference and they're quite big. So mainly because you're using different type of aircraft. Right. So where we categorize them. So there's ultra long range and then there is the super mid. Right. You mentioned Bombardier. Bombardier is a flagship aircraft, Challenger 3500. We place an order of up to 160 of them. We're taking delivery. So those are the super regional aircraft we're flying.

6:28So if you're flying, if you look at on that aircraft type cross country in the United States, somewhere around 50 ,000, 60 ,000 U.S. dollars. But if you're looking at a flight from, let's say, New York to Tuscany, so that's an eight hour flight. that will have to be on our global 6 ,000 or the global 8 ,000, which is ultra long range aircraft. So you're looking at somewhere around 150 ,000 to$250 ,000. And if you're looking at a round trip, that's half a million dollars. So that's very different. That's material, right? Compared to a first class ticket.

7:01Carol Massar:You know, and we also are seeing airports pouring a lot of money into some of the more private and premium terminals. Do you ever see maybe a world where there's essentially one airport for an experience for like wealthy travelers and then another for someone else essentially? I don't, I think in that regard, so private aviation, private travelers aside, I think in general, when it comes to travel, people want to save time and people want privacy and efficiency. So that's where you see the shift, right? Like where, where you're at the, I was actually talking to one of our clients about this today.

7:38As you mentioned, a lot of really wealthy people, when they're traveling internationally, they still fly commercial. And that's where, you know, we take, we do the board to board service, we'll pick up someone, you know, we'll pick up someone in Paris, for example, people get off Air France first class, and it will take them to Nice. And we do the same take someone from Hong Kong to Phuket, like, because we have our super our regional aircraft, the super mid on different continents. Now, I think In these different airports, when people get off a commercial plane or before the commercial plane, the really pain point is the airport, right?

8:12The security, the immigration. And so now there are different services. For example, San Francisco Airport, they're building a 75 ,000 square feet terminal just for people that are willing to pay for the premium to have that experience, right? You don't get off a commercial plane first class, and then you have to go through the same procedures as everybody else. That's definitely, I think, the next, it's definitely the trend for the premium travelers, private or not. People want convenience, and people are willing to pay for that. We're speaking with Leona Key, president of Vistajet US. She joins us here in the Bloomberg Interactive Brokers Studio.

8:51I'm wondering about pilots and the demand right now across the industry that you're seeing. are you having trouble finding qualified pilots right now?

9:03They're super in demand. And we only, for a company that we have the highest standard in terms of safety, how we pick our pilots, how we pick the crew, they have to have a lot of experience. And when they come in, we have in-house standards to train them. They're definitely, the supply is definitely very, very tight. but we're very um where where do they come from do they come from careers in commercial and then go into private aviation there's a there's a required retirement age in the u.s of pilots when they're done at 65 for a commercial airline can they go and fly with you uh so yes to answer that question they can but a lot of times even for a company like us or private company for example if you need to fly internationally to the caribbeans or to canada you you have to be under a certain age.

9:54So a lot of times we do get pilots from commercial airlines that they are retiring, but we also get pilots from other companies that are flying private. So when they're flying with a certain company, because we require pilots when they come in, they have to have a certain number of hours under belts.

10:11Carol Massar:I mean, also this private aviation, tell us anything about the economy before it actually shows up in traditional data? For sure. I think we're a early indicator of where the capital is flying, flowing. So when we're looking at, when we look at this bright spot, because people, I think, there's always a plan, right? When people are traveling and like you mentioned, spending exponentially amount of money to fly, there's always a business purpose. So they're flying there to make an impact, maybe to planning a project or doing an M &A is definitely early indicator of where wealth is flowing or people are building infrastructure.

10:53Where are you seeing that right now? We're seeing, I think, a really bright spot is China and Africa. We've been seeing that, and that's not for tourism. That's people are building the economic corridor to build infrastructure and energy sector. We're also seeing a lot of, for example, ever since COVID, we've been seeing there is people flying to Aspen that there's a spike because a lot of people are relocating to Colorado and people are building up business. But that airport under construction. It's a big headache, but the airport is investing because the airport is getting so busy. They're investing, I think it's over the course of five years, they signed a contract with FBO.

11:38It's up to a billion dollars. That's the demand there. And the airport really, I will say the airport needs some work because a lot of times it's one of the most challenging airport for any pilots to land. Yeah, there are a lot of private jets going in and out of Aspen. Leona Key, president of VistaJet US, joining us here in the Bloomberg Interactive Broker Studio. Please do come back. We love talking aviation. Thank you very much. I'd love to come back. Leona Key, president of VistaJet US.

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