67. How He Earns $2M/Month with a Charter Jet Business

0:00There's nothing like that rockstar experience when your Benz pulls up to the side of your plane and your pilot walks out and shakes your hand and walks you on board the plane and hands you that drink that we know that you want to ride your Ben. Do you want to run a business that caters to a luxury clientele? There's little that screams luxury quite like a private jet, and charter jets are an industry with a huge profit potential. Ajax Jets founder Justin Sullivan knows this firsthand. His passion for aviation and high-class customer service led him to starting a charter jet business 15 years ago, and his growth since has been phenomenal.

0:46Today, his five aviation companies bring in a combined seven-figure monthly revenue, and he's here to share his story and advice on how to start a charter jet business with our listeners. Justin, thanks so much for joining us. Thanks for having me, Alex. Great to be here. So to get things started, I just want to hear about how you got into the CharterJet business and how that eventually led to Ajax Jets. So I was enamored with the industry. I was in tech sales to start off my career at a university. And in the recession of 2003, 2004, a couple of my friends went over to be sales reps with one of the largest companies in the industry based here in the Boston area.

1:20I had never heard of the industry and just felt, man, I would love to be a part of that. And I interviewed with that company, got a job offer as a sales rep. But instead, I found an opportunity with one of these dot-com startups who had raised a bunch of money to go out and tackle the on-demand charter world. So I came into that organization as VP of sales, really like a player coach. And as we'll talk about Alex, this business is really about personal relationships and deep domain expertise. you know, doing a great job for your clients and being a world-class sales and service person. So I took like a duck to water to this.

1:55And, you know, it was like 15, 16 years ago, started off working for the man. I love that. I love that. Now that first company, is that private flight? The company that I worked for originally is the predecessor to Sentient Jet, which is still like the 800 pound gorilla in the industry. They invented the concept of private jet cards, which is really like a pre-funded membership. And, you know, that's really one of the lessons that I took from that experience and working with that company is that people buy programs, they don't buy proposals. And taking private jet access and turning it into an easy to digest and easy to consume program is what put that company on the map.

2:31And those lessons continue to pay dividends many years later. When did you kind of venture out on your own? About three or four years later. So probably 2011-ish, 2010. And really, I was ready to start my own business. I've done a lot of entrepreneurial things. Going back to my first entrepreneurial venture was in fourth grade, selling bracelets made out of telephone wire through the school store. And I've had an entrepreneurial bug up my butt ever since. So I think when I got into this industry, I had probably done 10 or 11 different startups. Wow. That's an incredible track record of experience to have coming into getting a company off the ground.

3:09To the outsider who's not as familiar with the industry, I imagine I won't be surprised that it's probably an expensive industry to break into if you're going to start a company. What are some of those startup costs that exist to starting a charter jet business? So it's a multifaceted industry, Alex, to be a charter broker where maybe it would just be helpful to your audience to back up and just explain the market, if you will. So there are high net worth individuals, athletes, entertainers, business owners, companies who do not own a private jet and desire to fly from point A to point B. So they'll want to fly, say, from Boston to San Francisco.

3:43And on the other side of the continuum, there are airplane owners who hire management companies. We're really private jet airlines. They're called Part 135 Air Carriers. And those are companies that are duly licensed from the FAA to hold out commercial air transportation. They're typically small flight departments that cater to a local, highly local clientele. And the job of charter broker is really no different than the job of a travel agent. And that we take a unit of demand, in this case, Mr. Big is trying to fly from Boston to San Francisco, and then represent that client in the marketplace of different air carriers who bid on those services.

4:20And as a charter broker, you earn a commission, typically 10 to 15 % of the top line revenue for facilitating that transaction. There are no barriers to entry in our organization. We do a lot of athletes work or flights for athletes. And that's because we have a former major league baseball player played probably three years in the Pittsburgh Pirate organization and built a lot of great relationships that he could extend beyond his playing career. So this is a guy from Latin America. He knows everybody. And he's built for himself a beautiful business of being a charter broker. And for him and for us, if there's no barriers to entry, anybody can go start a charter company tomorrow.

5:08It just takes years of developing the domain expertise. because if you think about it, we're really selling the most exclusive high-end product in the world. That flight from Boston to San Francisco on one of our jets is about$35 ,000 one way. So not only do you have to be a skillful negotiator and a polished sales professional and relationship builder, but you really have to be a domain expert in sourcing that, knowing the legalities and delivering a world-class buyer experience. So that's how I started my career is as a charter broker. And if somebody feels that they have a book of relationships with high net worth individuals like that baseball player I just referred to, they could start their business inside our business and learn from the pros and have a whole sales and service delivery team behind them.

6:02So they're really learning the industry from the ground up and monetizing it as they do. And it's, you know, quite frankly, a very lucrative industry. What my business has done is we've grown from that charter brokering where, again, there's no barriers to entry into we acquired a Part 135 air carrier back in 2021. We operate a fleet of executive business jets that fly all over the world. And that does take money. So to acquire one of these air charter certificates is about a million bucks at the low end and it can be considerably higher depending on the assets that that air carrier has. But an air carrier itself is about a million dollars.

6:44They just have to know what to do with it once you buy it. So thank you for that kind of overview of the industry and how it works. That was really, really informative. And I think, can we take it just another step further? And can you kind of give us the overview of the structure of Ajax Jets? Because I know there's multiple companies under the umbrella. Can you talk about what that structure is? And then I kind of want to go into the advantages of kind of adopting that structure. Yes. So one side of our business continues to be charter brokering and really retail access to our fleet of planes.

7:10So we have a portfolio of high net worth individuals, athletes, entertainers, corporations who desire to fly privately. They work with myself or one of our agents to facilitate those trips. Another side of our business is that part 135 air carrier where we operate a fleet of planes. We own a couple of them, but most of them are owned by other high net worth individuals and companies who, for various tax, operational lifestyle, and other reasons, have invested in an aircraft. And we manage that much like a real estate management company would manage a timeshare for you. They deal with all of the maintenance, the insurance, the monetization, which in our case is charter.

7:51And then the third leg of our business is aircraft maintenance. In Buffalo, New York, we have a hangar full of technicians. We initially started that business, Private Jet Maintenance LLC, to cater to our own fleet of planes. And when I talk about maintenance, I mean keeping our airframes and jets flying legal and safe and compliant. So think about your car, there's Service E comes on and you have to take it to the dealership and they run it through 97 points of what service E is, that it's the exact same thing of keeping a private jet maintained to its manufacturer's specs, which is what we need to do in order to fly legal charters.

8:30So that business started just providing maintenance for our own fleet of planes. And now we provide outstation maintenance, outsourced maintenance management services. So private jet owners who don't want to charter their planes, but realize the complexities in maintaining it and managing all of the service bulletins and required upgrades and work that needs to be done and all that proper tracking. And they outsource that to our operation in Buffalo. So altogether, it's three companies and about 100 FTE. Why the structure of operating them as three companies under a parent company, as opposed to either bringing them all into one big vertical or you being the CEO of three different companies?

9:14That's a great question. In capitalizing the part 135 air carrier, I raise capital and I have financial partners in that side of the business. And the maintenance side really just morphed after the charter business came. And frankly, there's more liability and more things that could go wrong in the maintenance business. So the other side, from a marketing standpoint, Ajax Jets, Ajax, the type of jet that we fly is called a Falcon. Ajax is Greek for Falcon. So it has some symbology and it's a name, frankly, that I just really love, but it doesn't really speak to somebody who wants to maintain their jet.

9:55So we set up a standalone organization called PJM, Private Jet Maintenance, that does exactly that. PJM was, that's a company that about 20 people there, a little less than that, but that started two years ago with one key hire. Our general manager, Ben Chifo is a master A &P technician, has been in this industry for almost 30 years. And we hired him to be our station chief and general manager and director of maintenance. So he takes great pride in running his operation. He has full P &L responsibility as do the GMs of the other businesses. And it just, It makes a lot of sense for us to look at it as businesses that feed each other but are not exactly the same entity.

10:38You mentioned raising capital for bringing in the fleet itself. Can you talk about that process, both how you went about attracting your investors and what sort of planning you might advise somebody to be doing before they start approaching investors? Having a fully baked business plan and having deep domain expertise is essential to attracting investors. And also having investors that have an affinity for the thing that you're selling, the business that you're trying to get them into is essential. So naturally in private air travel and private aviation, it's a sexy space and it attracts high net worth individuals on its face.

11:16So I raise capital all day, every day, Alex. I'm selling aircraft. I'm selling fractions of aircraft and I'm doing it to my audience of high net worth individuals. So I'd say I have a little bit of an unfair advantage that if I was trying to start a home heating oil distributorship and I knew everything there was to know about home heating oil distribution, it lacks that one thing, which is not everybody who's into home heating oil is a multimillionaire. But most of the people who fly privately are multimillionaires. A quick reminder to our listeners that if you want more insights on how to successfully run and scale multiple businesses, make sure you listen to our interview with Serge Figuette in episode 60 of our podcast to hear how he runs five multi-million dollar companies.

12:00Justin, I'm curious about overhead costs in the industry. Can you talk about what some of those costs might be and how Ajax keeps those costs low? Overhead is extraordinarily high in this industry because we deal with very highly trained professionals. And in this day and age, highly trained professionals come with a cost. So one of the ways that we mitigate the overhead of the operation is think about pilots. For example, pilots are our biggest payroll item. A captain on one of our jets earns about$150 ,000 a year plus benefits. Second in command will earn$120 ,000. So essential to our business model is having those costs, all of the fixed and variable costs of managing an aircraft stand on the owner's side of the ledger.

12:49So the monthly overhead for one of our jets is about 80 grand a month. And fortunately, that's offset by the frothy charter revenue that these jets generate. And thus, it's a profitable outcome for the owner, either in terms of the flight time that he's getting and saving or, you know, hard dollars in his pocket at the end of every month. But beyond the management of airplanes, the business itself, the jet charter brokerage business is extremely lean. So our sales professionals earn a very modest salary and earn a lion's share commission. And all of the company share of that commission contributes to overhead.

13:29Beyond that, in the charter brokerage side, it's really a small amount of administration and back office and also service delivery. So the professionals who, once a trip is booked, ensure that the trains run on time, that the catering is delivered, the passenger manifest is correct, the air carrier gets all the correct information. But those people have a lot of capacity, and the overhead relative to the commissions that the charter brokerage generates is pretty small. Like I said, it's a lucrative business, and we're blessed to be in it. On the third side, the jet maintenance side, overhead for that is extremely high.

14:06hangar rent, technicians, insurance. Those bills are quite a lot every month. So we have to make sure that it's a self-liquidating business model. And most of our technicians are then billed back to the airplanes that they're working on. So we ensure that we remain profitable by carefully managing headcount and being very disciplined about ensuring that the most important part of our business, which is managing customer relationships, is always a self-liquidating side of the business because of the commission arrangements for salespeople. You've alluded a couple of times to having deep domain knowledge to be successful in the industry.

14:46Can you talk about the best ways for somebody to acquire the various skills and knowledge that they would need to be successful? You really have to learn through osmosis by working with a company that's in the industry. I've been doing this a long time and every week I learn something new. To be a charter broker and have success in that, you really have to, there's no way to fake that knowledge and that confidence. You have to know what you're talking about. And in many cases, the client knows more than you do because the clients are the ones who see the airplanes every day or every time they travel and they know their preferences.

15:19And you don't want to be a salesperson who knows less about it than your clients. So you really, if you want to crack into this industry, You've got to do it by working with a company that has that expertise. And frankly, one of my favorite things about what we do is we're bringing in young men, young women who are a couple of years out of college, who are like I was enamored with the industry and teaching them and teaching them through learning the sourcing, learning the operations, doing the various jobs inside the company, getting on our planes. Whenever our planes cycle through Boston, I bring field trips.

15:56So the team up to inspect the planes, meet our pilots, meet our technicians in Buffalo. There's nothing like seeing, feeling, and touching it to develop that domain expertise, but it also comes with time. So you have to pay your dues and learn from the pros. On the other side, buying a Part 135 air carrier, building a Part 145 FAA-approved repair station, Those are highly specialized business practices that you really have to know your stuff in order to get into those businesses. How I learned those sides of the business is I started a parallel career path. So before building PJM, before acquiring the 135 air carrier certificate, I managed assets, but I leased them to other part 135 air carriers.

16:40So I got my feet very wet and learned all the other facets of the business for five years before I was ready to go raise some money and do this as my own operation. What is one mistake you made early on with the company and what'd you learn from it? Early on, when we bought the 135 air carrier, we started a fractional program with our planes and sold four owners and four entitlements per airplane. And we took ourselves all of the operational risk of running the P &L of the airplane. That proved to be very complicated. And when we had all of these owner entitlements, we created an opportunity cost for not getting the full charter potential of our assets.

17:22So we became a slave to many masters and created just a lot of financial and operational pressure onto ourselves and really forced the right legacy business model, which is one owner to a plane. So now we focus on selling an asset to a high net worth individual who needs it, who needs to own an airplane for their own financial business, tax, lifestyle standpoint. And we're a slave to that one master. And for us, it forces us to really keep our eye on the ball of taking great care of a person and owner a business partner and keeping that business partner's asset really monetized to its full potential and earning, in our case, a very simple and straightforward aboveboard profit, which is a 15 % charter commission that we earn on all of our managed assets.

18:10So that one change to, frankly, a very big mistake has fueled great growth in our company and a pool of very happy owners who tell their friends. So I guess if I was gonna make this relatable to your audience, Alex, I would say, especially early on in the entrepreneurial journey, don't put financial pressure on yourself and force yourself and your business into the right business model that's perfectly aligned, even if you're ostensibly leaving more profit on the table. To kind of follow up on that, I'm curious how that feels like almost a fundamental mistake. And so how did you handle internally recognizing this is a mistake?

18:50And then now we have to shift the entire business to this different model. Well, it was an early mistake. And when you fail, you can fail fast. And the numbers don't lie. And for us, it was a combination of misaligned expectations and profitability that was way less than what we were used to seeing because of the opportunity cost of all of these entitlement flights. So it can take some difficult conversations and it did take difficult conversations, but you have to make some brass balls business decisions, especially in high stakes industries like private air travel. And it takes honesty and just being able to recognize failures and mistakes, call them out.

19:34And sometimes you've got to gnaw your arm off to get out of life's traps. Quite famously, COVID really impacted commercial aviation. How did it impact private aviation and Ajax specifically? At first, it was very scary. I think for the first two months, March, April, maybe even May, our entire fleet was grounded. March was very busy because everybody's trying to get home. And then April, May, we're completely dead. And the business crawled back to its form. The year 2020 was extremely difficult. Fortunately, we did get payroll protection, which kept our pilots and maintenance staff employed during those very lean months.

20:11However, after COVID or after the initial scare, the business really roared back to unprecedented heights. Demand was off the charts. And really the driving factor for us, Alex, was a great deal of consolidation in the industry. So companies like Wheels Up and Vista Global came into the industry with billions of dollars in expansion capital. And it's difficult to grow organically in one plane at a time for a lot of regulatory and compliance reasons. And what these companies did is they bought out many, many of our competitors. So companies like Red Wing, Aviation, Delta Private Jets, Travel Management Company, JetEdge, were all acquired, And these are big, you know, 50, 80 plane operations.

21:02So we found ourselves in early 2022 with over 50 % of the available floating fleet on demand air charter supply, which is the market that we're in, having been consolidated into four different companies. So not only was demand peaked, you know, dramatically, but it's hard to say how much, but 50%, but supply was cut by 50%. So that left companies like ours that remain standing with floating fleet of airplanes in a very enviable position with unprecedented pricing power. So flights that previously might have cost$30 ,000, we were charging$45 ,000 because we could. And that money is shared between us and our airplane owners.

21:52So it's been pretty amazing, to be honest. That is remarkable. And I'm curious about not necessarily the process of like physically acquiring the plane, but bringing in those airplane owners into the company, because obviously you're bringing them in essentially as a business partner with you. What's your process for a finding them and be making sure it's going to be a good fit? I'll tell you, man, the most successful marketing vehicle I've ever done is starting a YouTube channel. It's called Your Friend with Jets. And YouTube has given me great license to go extremely deep into my subject matter.

22:25and explain what it is that we do, show beautiful videos and pictures, interviews with our owners. And I get a great number of inquiries every week from my YouTube subscribers who see a video, somebody shares a video, and it starts a conversation. That's a really, really great transition into our FanBlitz questions, which come from our YouTube community. If you're out there listening, you can go to youtube.com slash upflip, join the community and you can pose questions to future podcast guests. We'll kind of just dive into these, Justin, because Andrew Goldman, the first question here is how do you market Ajax Jets?

23:01And at least partially just answered with that YouTube channel. What other channels are you using? Primarily search engine optimization. We invest a lot in Google pay-per-click and also organic conversions, email marketing, our email distribution list is 50 ,000 strong, and that continues to make it rain. New inquiries of customers, potential customers who require lift between point A and point B. And that's really where it starts for our team of agents. So YouTube doesn't really drive charter leads so much, but the search engine work that we do, I've been deep in search engine optimization since I started this company.

23:37So one of our landing pages has 12 ,000 pages on it, one page for every charter jet in the world. And little tips and tricks like that continue to give our agents a fresh pool of leads every day. What do you do with your profits? Live libido loca. I love it. What's the biggest purchase you've ever made? For me, it's not so much about the biggest purchase. The biggest purchase I ever made is a Falcon 50 for$3 million, but that's not what it's about. This is a fun business. It's been a really great experience building it, and I'm proud of the team that we have. So the general manager that I alluded to in Buffalo, New York, Ben Chifo, extremely experienced, has run shops before, runs that business like a drill sergeant, and it's beautiful.

24:22For a Part 135 air carrier, I'm the managing partner, but I'm not a pilot. I'm not an airplane A &P technician. I'm an entrepreneur. So the FAA mandates that we have three key management teams, a director of operation, a chief pilot, and a director of operation. So these three wise men are very well-paid, experienced airmen, and they run that operation. So I don't want to say that I don't do anything, but I have very experienced management teams in place with these very complex organizations, and I don't have to be there all the time. So in this day and age, you can run your business from a MacBook Pro and an iPhone, and I do that.

25:04I take a lot of trips. I mix personal trips with business. I meet people everywhere that I go. I have customers in all 50 states all over North America. So I've always got people to meet and they happen to be in nice places. So I get to go to those places and enjoy my experience. And I do. Can you give me one secret of business that will make me a billionaire? What I said earlier, it's people buy programs, not proposals. That is just absolutely wonderful advice. That is going to do it for our FanBlitz questions. A reminder to our listeners, you can let us know what you think of this episode by reviewing it on Apple, Spotify, or wherever you are listening.

25:42Justin, just a few more questions for me. You were just mentioning that management team, you've got about 100 full-time employees, full-time equivalents. What are the kind of key roles on your company's team? And how did you and how have you found the right people for those roles? The key person in my organization is my chief financial officer. And I found him kind of a cool story. Back in college, I was an intern at a public relations firm, and I somehow ingratiated myself to the management team there and became friends with them while I was in college. And the chief financial officer of that firm, 25 years later, is the CFO of Ajax Jets.

26:20Going a little bit further on the advertising, what is the typical advertising spend in a typical month? And you mentioned the search engine optimization is kind of being the primary outlet there. Yeah, about 10 grand a month in Google pay-per-click. That actually seems remarkably low for the kind of like high-end product. That's incredible. What sort of online presence do you need to have for the, I guess, probably the brokerage side of the business in 2023? Certainly a website that is high converting, but not even. You need relationships. Maybe I won't answer your question, but I'll give you another tip.