The REAL Cost of Private Aviation | A Peek Behind The Curtain

The world of private aviation can be pretty secretive. Anyone who's browsed aircraft listings knows it's hard enough to figure out what it costs to buy, much less what it costs to own. Today's guests build an audience by giving people a peek behind the curtain.

$700 an hour in fuel and$500 an hour in deferred maintenance. If you want to own a PC-12, here's how much it's going to cost you. Those tweets started going bananas. Multiple, multiple, multiple billionaires, multiple, multiple, multiple hundred millionaires. I'm not going to say I have the most valuable audience on Twitter, but it's got to be up there.

Preston is the founder of Prestige Aircraft Finance, author of the Private Jet Insider newsletter, and co-host of the VIP Seat Podcast, where he discusses the inner workings and the business behind private aviation.

I think that people have a hard time wrapping their minds around how big NetJets is. NetJets is twice as big as the next closest competitor. We talk about what it really costs to fly private. I have a friend from Twitter who's worth$100 million. He pays himself$10 million a year, and he cannot figure out why anybody would fly private. What people commonly get wrong. One of the biggest misconceptions is that you can cash flow an airplane by chartering it. And how to justify the expense. Some people try and associate a dollar per hour. My time's not worth$10,000 an hour. Well, you're not really thinking about that the right way. My name is Mitchell. This is the AirPod. Now let's hear a little more about Preston. My name is Preston Holland. I am uh the founder of Prestige Aircraft Finance. I'm also the co-host of an awesome podcast called The VIP Seat. We're the top business aviation news podcast uh in the space. And uh I'm also the co-founder of a company called FastJets. So I do a lot of things, wear a lot of hats. Uh, but yeah, um my background is so my dad was a pilot before I was born. Um he flew bonanzas and barons out of Atlanta and PDK uh for the Federal Reserve of Atlanta, and he flew bank checks back and forth. So that was like, so that was kind of how like it all started, right? So he would tell me stories about um like the original flight simulators. Like he like Atlanta had a lot of the very early flight simulators, like before they were actually good. Um, and so he'd get to fly on those and stuff. My uncle worked for Delta. So like I always had kind of aviation in my blood. I think I took my first flight when I was um like 18 weeks old or something like that. Uh went to go see my grandparents, and you know, I I flew uh commercially by myself for the first time when I was like 12, you know, unaccompanied minor or whatever. So I always like loved airplanes and uh loved aviation. There's obviously more commercial side. My dad was more GA side. So I was like, well, you know, someday I'd love to learn how to fly. You know, grew up in St. Petersburg, Florida. And I was like, all right, I'm gonna learn how to fly. It's gonna be awesome. Like my dad and I could fly together, it'd be, it'll be great. And then uh 2008 happened. My parents were in real estate. So, you know, affording to fly was not really in the cards. So I went to college, kind of like I had I had kind of sidelined the dream of like getting my pilot's license and like getting into aviation. And then I was doing it was actually it was funny, like I was actually I was I was working for a company called 101 Mobility. I was the you know, general manager for a franchise territory, and I was driving back and forth from Chattanooga, well, actually just south of Chattanooga to Knoxville, like three days a week. It was over off like perimeter park, like right off 140, right? You're a Knoxville guy. Um kind of close to the airport, like relatively, you know, straight shot from the airport. And I was like, man, and like kind of close to downtown island. I was like, man, if I could get my pilot's license, I wouldn't have to make this hour and 40-minute drive every day. I could just fly and it'd take me like 30 minutes. That would be awesome. Um, and about that time, uh, a guy that I knew was buying an aviation company and was like, hey, I need some help, you know, working on this. And I was like, I don't really know anything about aviation. Um, I don't know anything about the media space, but it sounds like fun. And so I'd, you know, be interested in in helping. I've always, you know, dreamed about flying and stuff. And so, yeah, so that's uh that's kind of how I got into the industry, was kind of on a you know, random phone call that was like, hey, can you come help me? Uh and I, you know, kind of dove in, um, ran multiple aspects of that business, really kind of got engaged in the community, went to my first Oshkosh, uh, which was a lot of fun. And then uh yeah, and then um about a year and a half ago, decided that it was time for me to kind of start my own thing. So, you know, very entrepreneurial. And so I started Prestige Aircraft Finance. Um, and around the same time, my friend and I were kind of talking about this side project uh fast jets. And uh yeah, so we came out of stealth on that in December of this past year. So yeah, that's the like, you know, longer, probably longer than you asked for the background version of it.

Yeah, it it's funny when I talk to people doing this. It people are either on one end of the spectrum where their family, you know, they're like third, fourth generation aviator, and all their family were airline pilots or whatever, or they just kind of tripped into it somehow. And it sounds like you're kind of in the middle where you had the history but just kind of stumbled into a career in it. So that's cool.

Yeah, exactly. Yeah, it was like, you know, I was always like admired from afar. Um, you know, grew up relatively close to PIE uh airport. And so uh yeah, so I was, you know, always kind of admired from afar, but I was familiar with general aviation, but I wasn't like in it, if that makes sense. I wasn't like, you know, wasn't like, oh yeah, my grandpa, you know, used to fly fighters in World War II and stuff like that.

Yeah. Um you also have a pretty good following on Twitter or X, and you post a lot about aviation stuff on there. How did you get started doing that and how did that following kind of grow?

Yeah, so um so the the the kind of secret sauce, like this is the thing it's funny, like I'm in a group chat of a bunch of people that are like trying to get their X followings going. And the one thing that like none of them realize is that I invested in X, probably like not financially, but my time in X starting in like 2018. So this was like before Elon bought it, before it was called X, you know, it was truly Twitter before the Twitter files, before COVID, right? Like kind of like way back then. And I stumbled across it because I was what was happening was I was running a small business and I had, you know, a bunch of employees that reported to me, and I was like, I was trying to learn on the fly. I mean, I was a really I was a young guy in management. Everybody that reported to me was like twice my age, and I was like, man, like I just don't really know what I'm doing. And I have been on, I think I've had a Twitter account since 2012, right? But um it's funny, funny enough, my cousin is actually Twitter famous. He's my more fake, more Twitter famous cousin. His name's Simon Holland, like Simon C. Holland. He's like always like getting posted by like the F Jerry account and like you know, all those kinds of things. Like he's he's hilarious, but he started on Twitter like a long, long time ago. So it's like really I was on there just following him. And I kind of stumbled into this corner of Twitter that was like small business Twitter. So it was like I'm gonna name some accounts. If anybody's like habitually on the internet like me, you'll be like, oh yeah, I know those guys. But like Nick Huber and Chris Powers and Noah Kagan and Moses Kagan, their cousins. Um, and like all of these people that were just kind of like it was almost like a Reddit community. Like apparently there's another separate Reddit community, but it was like very similar, right? Where it's like you would follow accounts and they'd follow you back and you'd reply and you'd talk in DMs to these people who have like pretty big followings, and even if you're like a nobody. And so like I started engaging in that community. I started tweeting about what I was thinking about, my management techniques, my, you know, things that I was doing, things that I was seeing. And kind of all of that started evolving. And I was like, okay, this is, you know, this is kind of interesting, the way that this is this is shaking out. And um I probably had 1,200 followers, right? So like that's not a lot in kind of Twitter world. Um, but I was followed by these guys who had hundreds of thousands or millions of followers. So that's like my 1200 followers were really valuable. And so the reason why I tell you that story is like you can't just kind of like blow up. Like for me, like you couldn't really repeat what I did because it's like I, you know, it kind of all leads to another. Um, there's a huge thing on Twitter about like uh like trust follows, right? So like if you see someone tweet something and 10 accounts that you follow also follow that person, you'll say, Oh, okay, well, this is somebody who's worthy of following. I somehow figured like got that like boost bonus. So when I, you know, started tweeting about airplanes, and like frankly, it was like airplane porn. Like I was just like found beautiful pictures of airplanes that tweeted them. Um, because I was working in in private business aviation. And I think like that trust mechanism really helped kind of like create this fuel, you know, this fire fuel. And the real unlock for me was when I started tweeting prices about like how much stuff costs. So like I'd have like a cost calculator, you know, I use Avia cost. Uh back then I was using Conklin Decker, and I'd just be like, hey, the PC-12 costs, you know,$700 an hour in fuel and$500 an hour in deferred maintenance, and pilots are$85,000 to$90,000 a year, and hangers$20,000 a year. So, like, if you want to own a PC 12, here's how much it's gonna cost you. Same with like globals, all that kind of stuff. Those tweets started going bananas. I mean, it was like I would gain like two or three hundred followers per tweet. I mean, it was like, it was crazy. And so I found like this formula that worked and it was all around transparent pricing, like telling you how much it actually costs. So I did all that, and um I had put out, I was like, hey, if I wrote a newsletter, I just like put out a random tweet, like a survey tweet. I was like, if I wrote a newsletter, would you read it? And yes, no, that was it. And all of a sudden, after like an hour, a hundred people had voted yes, and I happened to know that like 20 of them owned airplanes or like flew private in some way or another. And I was like, okay, people care about what I have to say. So I started writing a newsletter. Um and that's kind of like, I don't know, it all, it all compounds, right? It all, you know, it all kind of grows. I'm at like, like I'm still not really like in the grand scheme of things, not that big of an account. Um I think I'm at yeah, 26.9,000 followers. So like 20 call 27,000 followers. Um, that's like not that big. You know, when you think about like I don't know, Bill Gurley has like four million followers, right? That's that's a big account. Like I'm kind of, you know, I was still a small account.

Yeah, but super niche, right? And I think that's where that's where it's valuable. Um, you know, you have uh you talk about F Jerry, like it's just a big account that posts random whatever for all these people, but people that follow you are really interested in the stuff you're talking about specifically.

Yeah, I mean I have I probably I'm not gonna say I have the most valuable audience in on the on Twitter, but it's gotta be up there. Like multiple, multiple, multiple billionaires, like multiple, multiple, multiple hundred millionaires. Like because it's it's a topic that's like very niche. But the thing is, is like the advantage that aviation or I don't know, the advantage to creating content in aviation is like it's not very transparent. So it's like no one knows how much like no one knows uh half of the stuff that goes on in aviation. So if you just kind of talk about it, it's like all right, this is kind of cool.

Yeah. I mean, you can just go on controller and scroll and how many of those are call for price, right? Like it won't even tell you what you gotta pay to buy it, much less what it costs to run it.

Right, exactly. Yeah, no, it's it's nuts.

Yeah, the the peak behind the curtain, uh I think I want to get into a little bit because, like you said, it's just this weird nebulous world that people don't know a lot about, um, business aviation in particular. You know, the GA side, there's enough information out there and enough people do it that I think people have to do. There's enough Instagram.

There's enough Instagram people out there, like I don't know, you have Stevie and you've got Steve Oknevo, and like, I don't know, just like all those, they're all very cool accounts. Like, it's not I like GA, but I'm not like that, I don't know, like not that nerdy about it. Uh but yeah, in in as far as like Bizav goes, like it's it's mostly can we cuss on this show? It's mostly bullshit. So uh it's it's mostly bullshit.

Yeah. And um the rise of you know the TikTok world, and uh now I guess it's getting more into YouTube too, but these people that just go out and spout whatever, we'll get into that later. And I have like a myth section I want you to bust because I know you've done it on your show too. Um I think some of them some of them are pretty funny, so we'll get into that later. Yeah, that's great. Um on the business side of aviation. For business owners to justify getting into private aviation, when does it make sense for them to start to look at like I need either to charter, I need jet card, I need a fractional, or I need to buy my own aircraft.

Yeah. Um you you you did a great job like framing it up. I'll talk, uh let me take one step back before we talk about like the modes of private aviation, and let's talk about like why the what the need is for private aviation.

Hey, real quick, before we dive into that, I'm on the road to a thousand subscribers. So if you listen to the AirPod on YouTube, Apple, or Spotify, if you can just drop a subscribe, that helps me out a ton. Now let's get back to Preston.

And general aviation is private aviation, especially like Cirrus has created this like very interesting kind of like right. It's like a they're the they're kind of the bridge into, I don't know, I'll call it like my world, which is the stuff that I talk about versus like GA world, right? Like Cirus like lives right there on the on the fringe. Um, but let me take like a half step back and talk about like um there's two types of private flyers. Okay. You have like this is going to accelerate and improve my business. And then you have I have made money and therefore private aviation is the top thing on my list, right? Of things to do. Um, so those are two like the economics are very different in those two groups of people. Um, it's funny, I was talking to a guy over the weekend who called me and he was like, hey, look, um I'm a you know defense tech contractor, like I'm trying to go, you know, I need to travel a little bit for work, but mostly I hate flying to Martha's vineyard with my kids on commercial. Like it sucks, and driving sucks. And so I want to fly private. I don't know what I'm doing. Um so like I think the first question that you have to ask yourself is is private aviation going to create a multiplying effect on my business? It's interesting. I'm I'm working on an article right now. I'll kind of like tease it for your audience. I'm working on a long-form article because I haven't been writing long form enough. Been, you know, kind of slacking on that. But um it's basically talking about how AI is going to create this giant wave of users, right, of private aviation, not only from like the efficiency gains that we're gonna get, but also from like all the millionaires and 100 millionaires that these companies are going to create when they go public, like like crypto 2.0. Yeah, exactly. But these people are like less, I don't know, dungeon, you know, they're they're less like dungeon creatures, right? Um, not everybody in crypto is dungeon creepers, but it's you know, it's skews that way. Um so I think that like so that's kind of my thesis. But I also think that AI is going to unlock a lot of efficiencies for business owners to free up profits and therefore allow for them to use private aviation to increase you know their efficiency in their business. So when you're thinking about using it for business, let's let's like talk about that persona first. When you're when you're thinking about using it for business, you have to ask yourself, is the is being from point A to point B going to create like a multiplying effect on my business? Or is there a way in which I can have multiple client visits in a day in multiple geographies that I would not be able to do any other way? Some people try and associate like a dollar per hour and they're like, oh yeah, my time is worth this much per hour. And it's like you're never gonna be able to justify it in that way if you're like, oh, well, I'm gonna fly for two hours and I'm gonna spend$10,000 an hour. So$20,000, my time's not worth$10,000 an hour. Well, you're not really thinking about that the right way. You're really trading two hours for 12 or 16 or 18 hours of travel and you know, hotel and being tired and, you know, are you on your A game the next day and like all those kinds of things? But you have to have an in-person function. Like e-commerce founders, frankly, unless you're doing US-based supply chain, it doesn't really make sense for e-commerce founders to fly private, right? Like it's just it's prohibitively expensive to fly to Asia privately, you know, to go see your suppliers, right? And everything else can be done on Zoom call. Uh, it's really impactful for uh manufacturing. It's really impactful for supply chain. Anyone kind of in the physical goods economy, private aviation is a huge unlock. Um, for people in finance, like finance is typically like a very, you know, large driver. And when I talk about finance, I talk about like finance and real estate because like I have a friend, uh, friend client uh who lives in Texas and has a private airplane. And they found out about a deal that was going on that they wanted. They had underwritten it, it was priced well, that was they were gonna make a move on it. And it was an old guy, and he said, Hey, look, whoever gets here first gets it. So he jumped in the plane and bang, they're on the ground in an hour doing a site tour. They had an LOI in countersigned before any other competitor even showed up. So it's like those types of things, right? Or like deal guys, right, those are those are important as well. So, like uh the physical goods economy, kind of the financial services economy. And then, like, if you think about um like high high-level executive people doing biz dev, like roadshows, or you know, you want to do company tours or franchise owners is really really large of franchise owners, right? You have places, uh locations in disparate locations. Like that's that's the other piece, right? Is the other piece too. You live in Knoxville, I live in Chattanooga. It's a giant pain to go anywhere but Dallas, New York, you know, like uh maybe a handful of places. But if you and I wanted to go to Columbus, Ohio, uh, because I've done that trip, it's awful. Like you have to you have to connect through Atlanta, go back up, and then you know, come back down. Whereas in private aviation, it's like less than an hour away. Um, those those are the big unlocks. And Columbus, Ohio is like not even a good example. Like it would be like Toledo, Ohio. Okay, like even more of a pain in the butt to get to, you know, even the whole day.

Nashville. It until recently, I guess Southwest is doing direct from Knoxville now, but before they came in, it was like, okay, for me to go to the airport, fly to Atlanta, and then fly to Nashville, I can drive there quicker, even with the traffic.

Yeah, exactly. Yeah. And you're like, okay, well, that was a, you know, so it's like so it has this unlock and this compounding effect. Um, so that is uh with the kind of like first framework, right? Is is this going to significantly compound my business? Um and if the answer is no, it doesn't mean that you shouldn't fly private. It just means your hurdle is a little bit higher from a financial standpoint, like because it's totally gonna be post-tax money. But if you're talking about using pre-tax money, right, like depreciation, write-offs, whatever, pre-tax money, then you should, you know, you should definitely consider what does that actually look like from a financial standpoint, right? So, like, how much do I need to be making before I, you know, start flying private? So the I ran a survey from my newsletter audience. And then I also like part of my business is I get to look at people's financial statements while they are buying an airplane. So like I know how much they're making. Um, the other one quick nuanced piece from the from what I just said about how it's either pre-tax money or post-tax money. You can, if you have mostly business use, but some personal use, you can still make a good argument because it needs to be 51%. This is not tax advice, but 51% or greater of business use and it becomes a depreciable asset, it becomes, you know, a tax write-off as a whole, and then you can use it some for personal. So that's just like a caveat. Like you don't have to just use it for business. And if you take your wife and kid to Disney World, you're not like busting, you know, busting the rags or anything like that. Um, so anyways, back to like how much money do I need to make. Uh I ran a survey of my newsletter audience and basically said like how much like were you worth and how much were you making per year before you quit seeing. Inside of an airport terminal very often. The number was$20 million of net worth and$2 million of net income. Now that is net income back to you as a business owner. Because like, again, most of my audience is business owners, but it's$2 million back to you in either like a distribution or a salary or whatever as the owner of the business after tax. So like that's typically, you know, you're paying yourself about$2 million. You're worth about$20, including your business, right? Like if your business is worth$10 and you have$10 million in outside investments, then you know, you're kind of hitting the not look not being inside of an airport terminal very much from there on out. Now there's some there's like a standard deviation both directions on that. Like I have a friend from Twitter who's worth$100 million. He pays himself$10 million a year, and he cannot figure out why anybody would fly private. And I'm like, well, you know, to each their own, I would have many moons ago, like I would have not seen the inside of a commercial terminal again, but you know, up to you. You can't take it with you when you go. Uh, I have a client who told me this uh if you don't fly private, your son-in-law will. And I was like, aha, got it. Okay. It's not even my daughter, right? Who's four, who I would totally want to be flying private, but it's her husband. And I'm like, okay, cool. Well then I'm I'm gonna do it. I'm not gonna, you know, I'm not gonna get that to him. He's gonna find it, he's gotta, he's gonna figure out how to do it himself. Um, so yeah, so uh so two, two and twenty is like a really good uh is like a really good metric. And then I would say from there, owning an aircraft, like fractional becomes probably somewhere between like it fractional will live in that two and twenty, depending on your tax benefit and like your tax strategy. It would still be in kind of that world, the two and twenty, um, up to you know, call it a hundred million in net worth, including your business. Um, and somewhere between five and ten million dollars of that's when it starts making sense to own something right now. Again, huge spectrum for that. Uh, like I have a client bought a PC 12, he makes$5 million a year. He's worth about$100 million if you put a multiple on his business plus his real estate. And he bought about a$5 million PC 12. So, like, you know, this is like a generally good rule of thumb is like one, one or two times annual earnings personally, like is a good target for like your airplane, uh, you know, for what type of airplane you're buying. Okay.

I like that you mention uh factories and stuff too, because I think a lot of people think, and we'll get to it in the myths, that it's like these billionaires, tech billionaires, and yeah, they obviously fly private too, more for security reasons than anything else, probably. But um, you know, there's a lot of like blue-collar business owners or bigger companies. Um, I don't know if it's still the case, but I know Walmart used to be one of the biggest operators in the huge aviation. They're massive.

They're they yeah, they they arguably they're they're either the largest corporified department or they're darn near close. They've got like 15 or 20 airplanes.

Yeah, because they're flying to small towns in places that are hard to get to, like you talked about. They're going from Chattanooga to Columbus or um, you know, where whatever the case might be, and they can get their people to three, four, or five locations in a day instead of one. Um so I I think that's a good way for people to look at it. It's not just the owners, it's you know, middle management. I used to work with a lot of power utilities. They fly their lineman places on their company jets. Um, but uh if they have huge territories, you know, Duke, PGE, uh actually I don't think PGE operates jets, but I know Duke does. Southern Company has them. So some of these companies Little Little Debbie.

So like Little Debbie runs a shuttle uh back and forth. They actually run like an ERJ shuttle, like a it's basically like a JSX between their three factories. Um and they like hand uh they hand transport stuff like between places. Um yes, that's pretty cool. Uh it's like it's it's super interesting.

It was funny. I was talking with guys at I don't know if they want me to say which company, but one of the power utility companies, and during COVID, they weren't letting their executives fly anywhere. They couldn't travel, but the pilots still had to stay current, so they were flying COVID test kits around in their, I think they had um challengers maybe. Um, but it's just funny to think these guys are just flying COVID test kits in private jets all over the country. Yeah, they cost what a dollar a piece.

Yeah. That's like you're flying it around in an airplane that costs eight thousand dollars an hour to operate. Like all right.

Um getting away from the ownership piece, more into like fractional and that kind of stuff. Who are some of the key players in uh fractional, jet car, that world?

Yeah. So you have the largest operator of private jets in the world, which is NetJets. Thank you, Daddy Warren Buffett. Um, they are like an order of magnitude larger than anybody else. So I I think that people have a hard time wrapping their minds around how big NetJets is. Um, but I'm pretty sure that NetJets is like very similar size to United from a flight operation standpoint and like aircraft size. Okay. Uh and then you have Flexjet. So they're the in second place, and they are half as big. Like NetJets is twice as big as the next closest competitor, which is crazy. And Flexjet's still pretty big, like they're also bigger than most everybody else combined. Um, so it's like this very, it's like this non-pareto curve, right? Like any statistics nerds, right? The 80-20 rule, like it does not exist in private aviation. It totally is a duopoly, and then a whole a giant long tail past that, right? So you have flexjet, second largest. I have heard that they are very on par with like Southwest as far as like size and scale goes. So like you have like United Southwest and then a bunch of like tiny, relatively tiny mom and pop operators. So in fractional, they're both in fractional world. They also run charter. And when you when you do the math, I think you give um so NetJets, actually, both businesses are very similar if you look at how they're done structurally. And so, like, we'll drill down really quick on those two, because I think this is interesting. Um you have NetJets, and NetJets is kind of like the parent company, and that is quarter share, right? I'm gonna buy a share of an airplane or a jet car. They have a jet car program, um, which is like kind of like core, you know, headline marquee brand. Then you have like they own flight safety. Well, Berkshire owns Flight Safety, but they're both owned by Berkshire. So for all intents and purposes, their own common ownership. Um, Flight Safety to do the training for their pilots. They own some MROs, a few MROs out there. They own uh executive jet management, which is their like managed fleet charter arm, which is massive. I mean, like NetJets is huge. EJM is also huge, like as far as you know, management goes. So it's management charter. Um like and and Flexjet has parallels, you know, you can draw a one-to-one parallel. Flet Flexjet has corporate wings, which is their management charter arm. They also have Flexjet. They have oh, what's the they bought a training company a couple years ago. I'm trying to remember which one. It's out of Florida. I don't know if you can remember. I don't know. It's escaping me. I I talked about this in my article that I rocked. I I wrote a big article about Ken Ricky. Um and I like compared the two businesses, basically saying that like, look, you know, there's a lot of uh there's a lot of commonalities here, like in in what you can see. Um so EJM and corporate wings, then you have oh SimComb, that's what it was. So uh FlexJet owns Simcom, Flight Safety, they have aircraft sales. So like they're they're just these like massive multi-vertical businesses. Um so those are like kind of the big two players. Uh from there, kind of stepping down. You have AirShare, who's like a day-based model, uh, Phenon 300s and Challenger 3500s. Um their CEO just got on X, which is fun. We've been coaching him on how to be unhinged. Uh, so you know, we'll get there. Um, and then we have uh so those are kind of like your big national players. You have um you have Plain Sense, who is a PC 12, PC24 fractional operator. Uh so those are like, you know, those are kind of big nationals. There are other programs who have fractional. So like Fly Exclusive has a fractional program, but I would not call them like a dedicated fractional operator. They're really a branded charter. They're using fractional to finance their fleets. Um so I think that so those are kind of the big players. And then as you kind of get smaller regional, you've got some like other smaller, you know, regional type players. As you know, Florida's got a few, Northeast has a few, but those are like the big fractional players. Okay.

What would you attribute uh NetJet success to? Is it that kind of goal?

They're first. I mean, it is like it is first mover advantage by far, because um, the reality is that that everybody is supply constrained by aircraft deliveries. And so NetJets was first. So therefore, they had a head start ahead of everybody. And it was like a cup, you know, 20-year head start, like 15-year head start. They in they're a category creator, they invented the idea of share of jet sharing. So I think that that is why NetJets is the biggest player. Like it's it, yes, it's execution and yes, it's capital formation. I mean, when Warren Buffett bought NetJets, it was actively going bankrupt. Like it was about done, and Warren Buffett came in, had to save it. And after he saved it, then now it's a good business. But like for a while, it was like not a very good business.

Yeah. And we talked a little before we started recording how that's just a tough space to be in in general. Do you think there's only room for, you know, the two or three big ones and everybody else is just fighting for the scraps, or do you think somebody could rise up out of that?

Yeah. So I asked Nick Fazzioli this question on my podcast last week, actually, because I had the same kind of thought. I think that the world of fractional so so let me let me talk about like macro fractional movement first. Fractional is the only segment in private aviation that's growing. Period, hands down. Like charter is shrinking. If you look over the last five years, the only COVID boost that has maintained its trajectories is fractional. So you would think that there must be green space for someone to create a novel idea, kind of infractional. Um Bond is trying to do that. They're trying to go like the Amon Hotel. Like if Flexjet is the four seasons and NetJets is like, I don't know, like uh the Ritz, then you know, Bond is trying to be Amon the Amon, like it's just stupid high-end, very exclusive, no charter activity on it. Um I think that there is some green space in charter, but I think that the reality is in order to benefit from the network effect from fractional, you have to have like 30 or 40 airplanes. AirShare, to a certain extent, has done it, and they've got like 27, 28, something like that. They have done it because they've expanded nationally. Um, but they're a days-based model, so they have a distinct advantage that the whole day is dedicated to that one owner. So you're you don't have to deal with like repositioning legs or like, you know, packing a schedule full in order for the economics to make sense. You're just kind of like, okay, well, there's 365 days. So there's only 365 days of availability on this plane, and we're never gonna have, you know, you may have conflicts, but like it's a much simpler business model. Um so I think that there is, I think that there is an opportunity for some of some of those models to like make sense, but to get to the on-demand, I want to go within 12 hours or 24 hours, like flexjet and netjets drop of a hat. Go after the corporate flight departments. Like you have to get scale to get there. And I don't know if it's possible today to get to that level of scale to compete with a flexjet or in NetJets. Yeah. I I just think it's really hard. I mean, like AirShare's been around for a while and they're, you know, just now kind of breaking the top 10 on flight operations. Um it's easier to build a branded charter like from a capital formation and like getting out there, right? Because like you're open for business today and it's like anybody can book, right? Like that's that's different. Fractional, like you have to sell eight shares of your airplane and then move to the next one and then shell here's eight shares of that. And so the scaling up, and then to get the network effect where it's like, I've got a guy in New York and I've got a guy in California, and they both need to fly like within 12 hours of each other. Like, that is operationally very challenging. Ideally, you'd have like one airplane up in the northeast and one in the west, and then they'd swap and you know, that kind of stuff. Um, craft charter is doing some interesting stuff in the fractional space. It they're they are kind of pseudo-hybrid fractional charter where they are fractionalizing their airplanes using an interesting 721 exchange fund. Um, and they're trying to get to that scale point, but I think that like even they will tell you like it's really hard at the like 810 airplane size, like we they really want to get to 20 so that they can start servicing kind of a nationwide base. Um, so it's like this is a this is definitely a scale game in the operator world.

Yeah. What do you think about the operators? You mentioned the one um that has PC-12s and PC twenty fours. What do you think about the ones that specialize in one type of aircraft versus the ones that try to have a variety?

Yeah, I think um it so like it's the Southwest model, right? Like it's like, hey, we're gonna have no diversification. Um I think that like if you look at the way that fleets are like composition of fleets and NetJets and Flexjet have so much scale that really they're a bunch of micro businesses. Like there's a there's a micro prader business, and there's a micro phenom business, and there's a micro challenger business inside of Flexjet. So I would say like throw those out. Like, don't even don't even try and compare. Move down the stack. Um I think the wheels up move has has proven that you have to get to unified fleet in order to make money because they had like a very wide dispersion of fleet and they were having it was just operationally very complex. Um, you look at a company like Jetlinks, who it's all it's all managed airplanes, right? Like they don't actually own any of the aircraft on their own balance sheets. And I think that like they have a I think that they have challenges because it's like you only hire three pilots for that one aircraft. If you have one aircraft type in your fleet, uh you can hire, and you have 10 airplanes, you can hire 25 pilots and they can all fly every airplane. If you have 10 different fleet types and you have one of one airplane, you still have to staff it. You still have to have three pilots, you know, to run a heavy charter operation. So three pilots for that one airplane. Uh, but it just becomes much more operationally intensive in order to do so. So I think that like uh I think that you have to, if you're gonna scale a fleet for charter operation or for fractional operation, you have to narrow down on a make model. And it like it gets you buying power, it gets you MRO power, it gets you like a lot of like a lot of scale advantages that if you have one of everything that you'll just never achieve. And it just makes it really hard.

Yeah. Um are you seeing more companies like larger companies that maybe could staff and support an internal flight department going towards a fractional just because it's easier to deal with? Yes.

So uh depending on who you like, uh there's a couple of brokers out there that basically like have have run a lot of analysis on kind of uh I called it the fleet of fractional. Um there's a couple of reasons for that. So if you remember JetGate, right, which was like during 2008, all the car manufacturers like flew all their executives to DC on the private jets, and they got a lot of flack for it. Um what ended up happening was was they all kind of made this pejorative move of like we're selling the planes for, you know, austerity measures and like we're gonna really cut costs. And then the secret was is that they all bought giant fractional shares and ended up spending like 30% more on private travel than they would have had they kept the airplanes, uh, which is like really ironic, right? Um so I think that like uh if if you think about like what are corporate flight departments, like what is in I think like if you if you think one step back, like what's important to corporate flight departments. And this is this is totally just like my opinion, my observation, based off of a lot of conversations with flight departments and with people who serve the flight departments. I don't do as much with flight departments. So this is totally like a macro perspective, not like super drilled down. But if you look at like what is actually important to executive travel, why do, why do companies have corporate flight departments, right? Which is like I'm gonna buy a couple of airplanes, I'm gonna staff it out, all that kind of stuff. It's I need to go now, right? If I if you need to go within three hours, right? Like if it's like I need to go right now, go to the airport, go, there's no other option. You cannot have fractional in that situation. If you have a little bit more flexibility, 12, 18-hour call-outs, and and these fractional companies will come in and they'll they'll sell them on 18-hour call-outs and like all this kind of stuff. Um it becomes very tempting for CFOs and for you know all these decision makers in these companies to go, oh yeah, well, we should just move to fractional because we have, you know, a couple million dollars worth of personal overhead, you know, personnel overhead. We've got the hangar, we've got, you know, all this kind of stuff. So they'll move to fractional. Um and then what they realize is is that like airplanes break, like new airplanes break, old airplanes break, airplanes break. Um, and the experience might be a little bit more clunky than what you originally set out for and what you originally thought it would be. Um and so there's actually been a slight move back to corporate flight departments. Like there's a couple, you know, remain nameless, but there's a couple of groups that went full fractional and are all like, eh, we're gonna go buy an airplane because like this is not as great as we thought. And they will use fractional for supplemental lift. And supplemental lift is well, we have six executives needing to go six places and we have three airplanes. Well, what do you do in that scenario? That's where kind of supplemental lift comes in. So I think like there's room for both in most flight departments. I think it's like totally a job of like advisors and planning to like figure out what that mix looks like. Um, but I think that like I don't think that the corporate flight department is going away, but we've had four shut down in the last 12 months. I mean, International Paper, um, Verizon, uh trying to think of a couple, there's been a couple of others that have just like totally shut down. Uh one um there is a there is a train, one of the train companies had their corporate flight department shut down. I'm not gonna say which one because I'm trying to, I am gonna get it wrong if I try and name it. I'm trying to remember who it was, but we had a large railroad corporate flight department shut down in the last like six months. Sure. And they're all going fractional, or there's consolidation and like there's you know stuff out there. But I think that is still I think a corporate flight department is still a really viable option for those companies that need like on-demand. You know what's an interesting company that I didn't realize had a corporate flight department? Buckled jeans. I'd never, yeah, you could have given me a thousand guesses. A thousand guesses, you would have never guessed that, right? I I saw a job posting. They fly a bunch of CJ4s. I was like, like three or four. Crazy. I was like, I would have never guessed. But I get, you know, I guess going to malls, right? Like, hey, yeah, you get into malls can be a pain in the butt. I was like, okay, like there's there's corporified departments that are like, oh, would have never guessed like that that company had multiple airplanes. That's crazy.

Yeah. Um, so my dad was in real estate too. He was a developer, and uh, we had a partnership or working arrangement with um Viking that makes uh kitchen appliances for uh they had a citation. Um, and it's just another one of those companies, like, oh, you know, the people that make the stoves, they have a jet that I guess they fly around all these communities.

You know, it makes sense if you've ever looked at the price of a Viking stove. Yeah, there's a lot of margin in there. You got it.

With the fractional side, I guess private aviation as a whole. So a little backstory on how I was thinking about this. When the Concorde went out of service, um, you know, a lot of it was blamed on fuel costs. There's a little bit of blame on uh, you know, the accident that happened uh a couple years before it it was finally retired. I think it was inevitable anyway. But one of the factors that I always used to think played a part in it that people didn't talk about enough is the rise of basically remote meetings, right? Like there's uh people didn't need to travel to the UK in a day. They'd always talk about, you know, you can be there for a lunch meeting and be home for dinner and that kind of stuff. Um and I thought maybe private aviation was going that route too, especially post-COVID. We saw the rise of Zoom meetings and all these virtual meetings, but it seems like there's almost more of a lift than there was before. Do you see any businesses saying we're going to take a step back because we can do more things virtual? Do you think that it's almost accelerating now?

I think it's I think that it was very so COVID was an accelerant for private aviation for the reason that a lot of people, individuals and companies that would have never considered private travel previously, used it during COVID and like kind of right after COVID, that, you know, health reasons and safety and airline travel and all that kind of stuff. And they realized, oh wow, this like really made a significant impact. I think that like the revenge travel is real, like the post-COVID, like I haven't seen, you know, I spent two years not seeing people in person. So now I'm gonna go see people. I think that like the in-person meeting is never going away. And I think that um I would say like the remote world has a will and can will continue and has historically created more pressure on the airlines than on private. I think that like it created a little bit of a K-shaped economy. I don't know if you ever like read about that, right? Where it's like, you know, bottom half goes down, a top half goes up. I think like it there's like a K-shaped travel economy as well, where it's like, oh, well, we're gonna travel less generally as a company, but when we do, we're going to make it higher impact by using private aviation. Um so I think that like I think that that's that's the general trend. And and based off conversations that I've had, I mean, like, you know, you're not you're not gonna do a site visit remotely, right? Like you can't go look at a building remotely, right? Like you you have to be on the ground. Um, so I think like that, like the physical goods, data center build-s have created like a huge con there data center build outs have created a need for on-the-ground in-person activity in places that you would never be able to get to commercially, right? Like you think, I don't know, like North Georgia has a lot of data center developments. So you can fly to Chattanooga, Atlanta, not Nashville, but like you're still gonna drive four hours to get where you're going. Or you can fly into the little airport right next to the data center and like be on the ground in 10 minutes. Um, I think like that is like a definite tailwind for private aviation in general. Um, like the physical, the again, the physical goods economy and the physical economy creating uh needs for that private aviation travel, I think is like, I think it's here to stay. And I don't think that it's like going anywhere. And I think that that those types of businesses have to be in person.

Sure. Yeah, I worked with a company previously and we did a lot of uh inspections for power utilities, oil and gas, that kind of stuff. Um we had at one point we had a PC-12 and then we had a uh TBM 850. And both of them for us, the selling point was the cargo door because we had like big sensors and stuff we had to move. We had one that we would lease it out, we had helicopters we used it on, and we'd lease it out to other utilities to use. It's like a$300,000 gimbal that's you know huge. It's it probably weighed maybe 80 pounds and was uh three feet tall. And it's like we're not shipping that freight. We're not taking that on Delta. And if you got to move it around the country, some of these companies would call and be like, we need it this week or we need it in three days, and that's the only way you're gonna be able to move it.

Yep, yeah, exactly. And so it's like, you know, freight, cargo, you know, those are those are those are big, big drivers of it. So yeah, I think it's I don't know. I think that like general trends are like trending the right direction for private aviation. I think that like, I don't know. I again, I don't think that like the in-person meeting goes away. Like I don't think that like you can't replace uh sales meetings. There's like a lot of things you can't replace with Zoom.

Yeah. Um you work with aircraft financing. And I want to dig into that a little more because I'd say generally my audience is not, you know, business jet buyers. I think it's a lot of I've garnered a lot of attention for pilots, which is great because that's the world that I come from. Um, but trying to help people understand what happens in the aircraft financing side of things, you know, it's not like I'm going to get a mortgage for my house or I'm going to get a loan for my car. Can you talk about how that's different with the aircraft side?

Yeah, for sure. So it is more like a mortgage than a car. Um and if you think about the type of information you have to provide to be able to afford a home, um, that's a lot of the information that you have to provide. So I'll start with like structuring. Okay. So like that is going to be a key decider. So you you you think about like I'm a pilot, I work for Delta, make you know,$500,000 a year, flying wide bodies, and I love GA. So like let's like take that person, for example. Um, you're owning it personally, so it it kind of gets treated like are you able to afford the airplane payment, right? Like at the end of the day, you have to be able to demonstrate that you can afford this because it's not like a home where it's a essential critical, it's a luxury, right? So it's like above and beyond what you would normally, you know, spend money on. And so uh the supporting documentation that you need there is like W-2s, tax returns, pay stubs, bank statements. How much money do you have? How much cash do you have? Uh, how much do you make per month? Is it ongoing? Things like that. And so, you know, the key driver if you're going to buy something personally is your debt-to-income ratio. Um, you typically want that to be 40% or less. And how do you calculate the debt-to-income ratio? If I make$10,000 a month and I have$5,000 per month in loan payments, so that would be including the airplane, my house, my car, you know, whatever my student loans. Like let's just, you know, take those four, for example. You want that to be 40% or less of your take-home income, right? And so that basically like creates this nice cushion of, you know, you don't have too much going out compared to what you have coming in. So you want that to be 45, 40, call it 45% or under of a debt-to-income ratio. That's the easiest way to like quick back the napkin calculate that. So if you have a thousand dollar house, you know,$1,000 car payment,$2,000 house payment, like let's say, you know, shock about like a normal person. So that's$3,000 a month, and you make$10,000 per month. You can calculate your airplane loan payment based off of what that delta is. So keep that under 45%. Um, the other thing is like liquidity. So how liquid are you personally? This needs to be in personal name, not in retirement, unless you're of retirement age. But if it retirement doesn't count, uh, it's all about kind of how much personal cash flow you have. Those two things determine whether you can qualify to finance an airplane. The other, on the other side, you have the uh you have the asset piece, right? So uh typically, right, you're you're talking uh, you know, lower end turboprop through, you know, piston airplanes. Like that's kind of the spectrum typically that that persona of person is buying. And if you're buying it personally, right, you don't have any tax need. It's more just like, hey, you know, like flying, that kind of stuff. Um, you know, you you want to buy something that is, you know, 1979 or newer, right? Ideally, but you can still finance stuff that's, you know, from the 50s and 60s. Um you want less than 10,000 hours. Uh, avoid, if possible, experimental aircraft. But that's not saying that you can't finance experimental aircraft. It just your rate will be higher, your amortization will be lower. So if you're cool with that, then you should buy an experimental airplane, typically certified. Uh, needs to be in annual. So, like, doesn't need you don't buy, you can't finance something that's out of annual. And if you're going to, as a part of your selling process, you need to tell the seller it has to get in annual. You need a pre-purchase inspection, or an annual within the last 60 days. Those are, you know, both interchangeable. Um, so air, you know, airworthiness, no missing logbooks. You want contiguous logbooks, you know, throughout the entire thing. Um, and generally speaking, you want midtime or better engines. So if you're close to an overhaul, right, or if it maybe it hadn't been overhauled in like 20 years, right? Um you can avoid that by having enough cash to demonstrate that you can afford it when that overhaul comes due. Uh, but typically midtime engines is always kind of the better thing. Assuming all those things, um, you know, kind of today, you know, you're looking at a down payment of between 15 and 20%. You're looking at that amortized over a 20-year period. So you pay as if it's a 20-year note. The term will either be five or fifty, five, between five and twenty years, kind of depends on which lender, those kinds of things. And rates today are going to be six and a quarter to seven percent. That's kind of, you know, it's end of the first quarter here in 2026. So that's kind of gonna be your general rates. Um, they don't always follow the Fed cuts, but they generally do. Like, so you know, if the Fed cuts a percent rate, you can anticipate around a percent decrease coming. Um, but yeah, that's typically how you calculate for the individual. For the person who owns a business, right? So let's say you're let's let's say same scenario. I am a pilot and I own a series of car washes or I own a bunch of, you know, Taco Bell franchises or whatever, and you want to fly yourself, right? SR22 is typically what you're, you know, you kind of see that persona. Um, you would own it in your business. So uh my business is set up as a schedule C. Uh, if I wanted to take deductions out of that Schedule C, I would then have to buy the airplane below the Schedule C, or 1120 is a um S corporation. You know, just depends on how you have your tax set up. In that scenario, I'm going to look at the cash flow from the business. So I need to look at a different metric, which is global debt service coverage ratio, DSCR is the kind of the shorthand for it. What that is, is all of the outstanding debt in my business and personally, and all the cash flow that I get, what is that ratio? Typically, the floor is 1.2 times coverage ratio to 1.3 times ratio. Notice very similar to that 45% debt debt to income ratio. It's a similar calculation. But it's basically can I service all of the debt that I have outstanding at the end of the day plus the airplane plus the operating expenses? Um, so that coverage ratio needs to be after the airplane debt. And then that looks backwards three years. So you want stabilized cash flows over three years. Now, you can get around that with a high, you know, if you put 40% down, you can get around that number. But typically speaking, that is generally how you'd want to look at it. Um, in that scenario in which it's owned by a business, the business is the main provider of cash flow, but they're also going to look at the underwriters, they are also going to look at your general global cash flow picture. So typically, business owners, they've got an investment over here that pays a dividend and they've got K1s from a few people and all that. So what we're trying to do is we're trying to paint the whole picture across the board. How much cash do you, how much cash flow do you make? Can you afford the airplane? That's like generally speaking how we're trying to look at this. Liquidity matters as well. You want to have enough cash in the bank, you know, to kind of cover, call it 12 to 18 months of debt, current debt payments, right? Is like a good rule of thumb. And that doesn't have to be like it doesn't have to be like cash deposits in a bank. That can be like an e-trade account or the, you know, whatever, right? Like investment accounts. That's generally how it's going to be looked at. Same parameters on the airplane. Um, if you're buying something turban, you want to really try and keep that, you know, 20, 25 years and newer, typically speaking. Um, and you know, don't wildly overpay. That's the other thing, right? Like you want it to appraise. Like that's, you know, it does need to appraise.

Yeah. And if somebody won the lottery and had$20 million buying a$20 million airplane, not a great idea. Yeah, because airplanes cost money to operate.

And also probably pay cash because like you're either pay cash or you're probably gonna have to put 40% down because you're gonna you have to demonstrate historical cash flow. So if you get$20 million airdropped into your bank account, it's like, well, we can't guarantee that person's gonna be able to continue to, you know, they're not making, they're not making money. They just made a chunk of money. You know, that kind of thing.

When you're talking to buyers, especially first-time buyers, what's like the biggest misconception that you run across?

One of the biggest misconceptions is that you can cash flow an airplane by chartering it. Like you can fly for free. I wrote an article called You Can't House Hack a Jet. Um, and it's true. You cannot charter it hard enough to you you might be able to charter it hard enough to make your monthly payment, but you cannot and avoid the maintenance man or avoid the depreciation guy. Right. Like your airpoint does depreciate every hour that you fly. So I think that like those are the um I think those are those are some of the net the you know, some of the net things.

Yeah. I'm glad you mentioned that because I was in my miss section at the end too. Yeah, you can't househack a jet. Yeah. Uh TikTok has done a lot of things for aviation and not all of them are good. And that's the ones that I've done.

Same thing on a piston airplane though. Like you can't lease it back to a flight school. If you buy an uh if you buy a 172 and lease it back to a flight school and you make a thousand dollars a month for three years, like guess what? Your engine replacement's gonna cost 45. There goes all of your margin, like all of it. See a buy.

Yeah. And if you are leasing it out or um chartering it enough, you don't get to use it. So what was the point?

Yeah, exactly.

What kills most deals? Like people, they're interested in the airplane, they have the finances, they're everything's good to go, and then the deal dies for whatever reason. What's the most common reason?

Airplane squawks. It's funny that you should say that because I just got an email from one of my clients that said, hey, there's an engine issue on the airplane we were looking at, and uh that's typically surfaced during pre-buy. Um, that's like the number one reason why deals fall apart, is that the airplane has some sort of gremlin in it that was not disclosed or not anticipated, kind of when just looking at the listing.

Is that something that is more the seller trying to cover it up, or it just happens to pop up?

Sometimes the seller tries to cover it up by not disclosing and are waiting for you to find out like if there's a problem with it. Um other times it's like they may have no idea, they may have had no clue that it had this like blaring issue, and uh maybe they don't want to fix it. And so, and the buyer wants, you know, an airplane that's like gonna be delivered in airworthy condition, and the sellers want to fix it. They don't want to come up with the cash and like fix the issue. And so like that's typically what kills deals. Um that that's I would say that's like the number one scenario is that like and it's just is stuff that like again, new airplanes break, old airplanes break, airplanes break. I mean, it's like just part of it. Um, it's why you really want to do like a really good, thorough pre-purchase inspection. Some things that like really can't be fixed, corrosion, right? Like that's wildly expensive. And so if you find corrosion, like deal dies. Uh so that's typically what happens. What I find on the acquisition side, and like one of the parts that's like great about what I get to do is that if the deal dies with that airplane, like we're probably just gonna go find a new airplane and you know, something that fits the parameters.

Sure. Do you represent sellers ever or are you just trying to typically just buyers?

So, you know, in the in the finance position, right? You're when you're selling the airplane, you're paying off the loan. So you may sell an airplane and then we're gonna go buy something else, but typically we're on the on the buy side or the refinance side. That would be like the seller equivalent, would be, you know, maybe your term's running out or you're looking to lower your interest rate, then you know, we'll help we'll help clients refinance.

Sure. Um, what are some current trends you're seeing in aircraft, I guess, purchasing? And by trends, I mean what aircraft are popular right now that are just filling a need that um you know everybody wants. We see the backlogs with the manufacturers of certain types. What are those aircraft?

Uh Goldstream G650s, uh, there's like one for sale, like one viable option for sale right now. Um those are moving really fast. G550s are moving really fast. Anything Challenger 300 series uh is a big driver of that is that everybody who's in branded charters buying them. So like Wheels Up's buying, craft is buying, um, baker's buying. Like there's a lot of people buying in that space. And so like you kind of you it's kind of like a chase. Um Phenom 300 market on fire, still, I mean, you know, you had you have these like players that'll come in and try and buy as much capacity as they can, and then they'll pull out somebody else come in, step in and start buying stuff, especially like like new phenom 300s or sit, you know, close to new, uh, are crazy. You know, you take delivery of one, you fly for six months, sell it for a million dollars more than you bought it for type, you know, silliness. Um newer PC twelves, very popular. Um because PC Pilates is only going to deliver as many airplanes as they want to. And so, you know, there's just a supply constraint in the newer stuff. Can't get them and people are willing to pay premiums. Um TBM960s are selling well. Um mid-model M600s, especially with Halo, so like call it 2020 to 2023, those are selling really well. Um hard to hard to kind of get your hands on. In the piston world, you know, it's not there's nothing like really crazy. I mean, there's a lot of SR22s for sale, uh so that's interesting.

Yeah.

But yeah, they're not not there's not like um like TTXs. I mean, you know, if you want a TTX, those things are sweet. Uh you know, comments.

The piston world's weird because you're either getting something that's 40 years old or it costs a million plus now. There's like no good middle ground. Exactly. Do you think those the jets, especially that you mentioned, do they just fit that need the best? Or what's the reason they're so popular?

Yeah, I mean, the 650 market has an interesting dynamic. Like a lot of people thought that the 650 market was gonna get crushed by the 700 and 800. Like basically 700 and 800 are gonna come out, and all of your like big flight departments are gonna move to those, and then all their 650s will hit the market. Well, what ended up happening was um all the 550 guys started climbing up and out into the 650, and the 450 guys climbed into the 550s, and then the 280 guys climbed into the you know, it's like everybody's kind of like climbed up the ecosystem. Um, and the 650 was kind of the choke point, right? Because you can't really get 700s and 800s. I mean, there's like very few of those secondary transactions that have happened. And the 700s are huge. I mean Yeah, they're massive.

Like if you have a hanger that fits a 650, it might not fit the 700.

Right, exactly. Yeah, which is which is pretty nuts. Um, yeah, hangar space is a whole nother problem with like fitting airplanes. So it's just like airplanes are getting bigger, and hangers are not. So, like, you know, that's big, big choke point. But I think that like uh and then and then you have like uh a lot of like trans, like these AI companies are all, you know, getting their hands on these ultra-long range planes. They're like, you know, we they need to go to Asia or they need to go to all their data center places, right? Like, and they have a crap ton of money. So it's like, why not? Right. Like so that that part's interesting. Uh but the 650 market's very it's like when I say supply constrained, I mean like there is multiple cash buyers out there waiting for an airplane that fits their spec to hit the market, like and it'll get bought up. So there's there's like a backlog in you 650s almost.

Yeah. I talked with uh Colin Dunn on the podcast. I think you you're familiar with him too. Um, and he said an interesting trend was people are coming in and going straight to 650s, like first-time jet buyers. And that he had never seen that before. It's like these guys are coming in and saying, you know, my first jet ever, I want a 550, I want a 650. Yeah, it must be nice. Yeah, seriously.

I think that's what I'm it's what I'd buy too. I mean, if I had that kind of money.

I mean, shoot. I really like the PC 24. I don't I don't need to go far enough to need a 650. Um I want to talk a little about what you're doing with fast jets. Uh can you talk about what an empty leg is to start?

Yeah. So an empty leg is created via a charter trip. Um if I live in Chattanooga and I need to go somewhere, uh, and the airplane is in South Georgia, it has to Go from South Georgia to me to pick me up. Well, that leg is empty and it's a dead head, deadhead, dead leg, empty leg, you know, repositioning leg, all of those kinds of things. Um, and these exist, I mean, there's thousands of them per day. And they have to basically the way that you bill them is you bill them to the live leg clients uh it because you can't guarantee that you can sell them. Now, there are perfect scenarios in which you have an existing client that's requested a trip that's already going and it's empty and then it alliance, right? Like those happen and everybody saves money. That's great. But you can't always bank on those things happening. And uh these things have existed, and there have been a lot of like apps and things that have tried to solve this problem, right? You have Jet Smarter who would buy every empty leg for$5,000 from the operators. The operator's like, oh great, I get an automatic$5,000 revenue lift, and then they would try and go and sell them, you know, at a very minimal profit with the membership model. Um that broke for a multitude of reasons, you know, just because it was like very intensive. They had to raise a ton of money and ended up not working out and selling to Vista XO. Um, you have a lot of brokers that will create charter or that will create empty leg opportunities where they are the broker in the middle. They're taking a cut out of the middle and kind of aggregating everybody's empty legs. But the problem in that scenario is that a lot of empty legs are owned broker legs. So a broker may have to fly an ASAP trip from Miami to Teeterborough, and the airplane has to repo out of Teterborough to Miami to pick the guy up. And because it's ASAP and because it's last minute, they just get stuck with both legs. So like maybe it's maybe it's a$20,000 trip, but they're gonna have to pay$40,000. So you have to move it back in. And so your occupied hourly rate goes way up. Well, those brokers try and remarket those owned empty legs that the operators stick them with. And if you're a broker, those brokers will never give you those legs because you're a competing broker. Um, and so I I the idea came from a bunch of end users on Twitter that like I had tweeted a couple of um, I had tweeted a couple of empty legs because it's like uh it's just engagement bait. Like you get followers. Uh, it's you know, I'm not ashamed to admit that I've definitely engagement baited before. And I would just like, I like I'd be in these Facebook groups and I'd be like, wow, this is just like wildly inefficient. So like I'd tweet like, hey, here's a crazy empty leg from you know Dallas to Aspen that's like, you know, 10 grand. That's a great deal. I found this in a Facebook group. For like, what? Like, that's crazy. That's like so inefficient. And so a couple of people who are existing flyers, they're, you know, quarter million dollar flyers and up, um, would send me DMs and be like, hey, we love empty legs. Like we know how much this should cost. And so we're always hunting empty legs. But the problem is is like we don't have like a clearinghouse for these. Like it's we're not exactly sure, like all any of these platforms, how it works, and all, you know, it's very opaque opaque and the flights never actually go and it's like kind of frustrating. And, you know, so we like go to the four operators that we know if we have a trip coming up and all this kind of stuff. But like we would take a leg if we knew about it. Like I talked to one guy, you know, he booked$35,000 G4 SP from Jackson Hull to New York City on a credit card. Cause he was like, Yeah, I know that I would normally pay$50 for that. So I'll take it. Right. His broker called him, was like, hey, I have this empty leg. And he was like, cool, run it. So we were like, okay, well, that's interesting. It's an interesting idea. But I also said, like, okay, well, here's all the other thousand ways that these platforms just don't work. And so I started talking to some operators, and I was like, so my co-host on the VIP seat, she was a former operator. I talked to a few different operators, and I was like, look, like, what's what's the problem here? Like, why have none of these platforms ever succeeded? And so they started kind of walking us through a lot of the pain points that operators have. And basically, what it boiled down to is every platform that had gone out to market had gone consumer first and operator last. Like it was like consumer first, platform second, operator last. And it created like all these like friction points and pain points for the operators. And so we're like, okay, well, what if we just kind of like pushed the transaction off onto the operator? Um, and it was like, okay, like that's interesting. Like we should, you know, it's their payment rails, their contracts. Like we don't actually get in the middle of the transaction. And so the idea is that like it is a marketplace for empty legs, right? So it's like, we are not a broker, we are not an operator, we are none of those things. We are pushing that totally off onto our partners. We are just aggregating all of the empty legs and aggregating all of the demand and trying to match those two things together. So our users go in, they save searches, they set point-to-point searches and maximum price. And then when the operator comes in and they have one that matches, we have a smart matching algorithm that basically says, like, hey, here's a leg that fits your profile profile. They will then go in, click, book. And then once both parties accept, the best way to imagine us is we are Tinder for empty legs, right? Like if we're gonna put it up in front of you, you're gonna say yes or no. If both sides say yes, then we're gonna introduce you and then get out, right? Like Tinder doesn't set up the date for you. Tinder doesn't like book the restaurant for you, like all that kind of stuff. It just like puts two people together that have a similar interest in whatever it is they want to do, right? Uh, so that's kind of that's kind of what we're doing. So it's it's basically like a matching software. We it's a there's a subscription on the user side and then a small take rate on the operator side if it sells. So it's totally free to list, totally free to put your empty lugs on there. We integrate with existing technologies that allow for us to pull it as close to the schedule as possible so that we have the most real-time data. And that's it. Like it's your customer, like we're not involved in the transaction, like we're not doing any shady business in in between. And I think for operators, that gives it eliminates the accounts receivable cycle, it eliminates the friction points, the KYC pieces, all of that. And so we've kind of created this ability to match those two groups together. Um, and it's really cool. I mean we just we just crossed 2,000 users. Uh, you know, we have over a thousand safe searches in the platform. So that we think is like really the secret sauce. And then, you know, from there we can kind of track mass migration data, and there's a lot of really interesting stuff that we can build, you know, off the back of that.

Yeah. Well, first of all, congrats on the user count. That's awesome to start out. Um when your users are going on there, are they saying, you know, I have to go to Teterborough from Miami or whatever, and I'm just looking for a cheaper way to do it? Or are they basically like, I'm looking for a cheaper way to do it. If I can't find it, I'm gonna charter anyway, or are they more like spontaneous, like, hey, if there's a good deal, I'm gonna take a trip somewhere?

Both. Um, it's typically like, hey, if there's a good deal, I'd take a trip, right? So like you think of like a big use case is Dallas to Aspen, right? Like, oh, I would go to my vacation house for anything less than 15 grand um anytime, right? Like I would be willing to go. Like that's a big use case for us. And that's really what we're trying to, you know, really focus on. Um, and I think that the uh the ability to do that is very unique in this space in that the um it allows for you to set dates in the future. And if an empty leg hits your search, then we'll alert you and you can go, right? So like you think about like the plus or minus three days on Airbnb, right? Like we've kind of created a little bit of a function of that where it's like you tell us, hey, in about three months I'm gonna go. And so if an empty leg hits, the reality about empty legs is that they normally don't hit for a like until very soon. So like you're taking a bit of a gamble, but if the gamble pays off, you know, it's great. And if not, you know, it is what it is. So like I I think that those are the uh those are the unique aspects of the platform that really haven't been, you know, tried in the way in which we're doing it.

Yeah, that's very cool. Yeah, I I've seen some of the other ones you talked about where it it really just seemed like uh from the people that have used it, a big frustration. Like you said, they'd get a trip quote unquote confirmed and then it wouldn't go for whatever reason. Or um yeah, so it sounds like a a pretty good problem to solve there.

Which uh look, MD legs cancel a lot. I mean, they just do. Like if the if the other trip cancels, then you get canceled. Like you just have to be willing to accept that. Um but if you're flexible enough and you're willing to go like within a short time frame, you can find some really solid deals.

Yeah. Cool. Um, I want to get into the myth busting real quick because I've seen you bust a few on Twitter and on the VIP seat, and I think there's some some good ones to touch on. So uh we talked about it earlier on, but one of the myths I see a lot is only billionaires fly private.

Yeah. I would say like billionaires is like a very small representation of private aviation. I mean, it looks a lot more like Main Street businesses, and it's people that you would probably never guess. And it's also you don't have to fly like Elon Musk, you know, 400 hours a year for it to there's like plenty of people who will fly 20 hours per year flying private. Like there's a huge ecosystem of people who fly private. Uh, and it's not always just you know Taylor Swift and Elon Musk.

Yeah. You think about how big the industry is. It couldn't survive on just Taylor Swift and Elon Musk. Yeah, exactly. There's gotta be thousands of people doing it.

Yeah, exactly.

Can you make$10,000 per aircraft detailing job?

Uh 10,000, it would be a perfect scenario. Uh$100,000, absolutely not. I mean, like, I saw, like, okay, a$10,000 aircraft bill means someone got violently ill on the aircraft. Like, that's a very expensive deep clean. Um, the reality is, is like it's it's significantly less than that. The guy is just a rage baiter and it drives me a little bit nuts. Dude, when he started getting popular on Twitter, I got four DMs from very serious people being like, hey, I'm thinking about starting an airplane detailing company. And I was like, where the hell is all this coming from? Like, why is everybody so interested in creating an aircraft detailing company? And then I and then somebody sent me his post, and I was like, okay, got it. This guy's telling everybody you can make$10 million a year detailing aircraft. And it's like, first of all, like you have to think about how many private jets come in and out of your local airport. Like, you know, that's problem number one. Probably not a lot, right? Miami, New York, Texas, like does your chances. Uh and and also, like, you can't charge that much. Like, it's a competitive market. There's a lot of people who have aircraft detailing companies out there.

Yeah. Yeah. Somebody calls you and you say, oh, my rush fee is whatever he says it is, you know, 20 grand or something. You're gonna get laughed at on the phone.

Yeah. These people are rich. They're not stupid. Like you know, they got rich because they're not stupid.

Yeah. Um we talked about charter hacking or house hacking your jet a little bit, but just to drive the point home, you cannot pay off your private jet by chartering it out.

Correct 95% of the time. There is like fringe, there's edge cases where it's like you bought it really well or you've had it for a long time, or whatever, where like the math kind of pencils. Generically speaking, even if you're cash flowing, the depreciation, like, okay, if you bought a plane for 10 million and you sell it for 5 million, you still lost 5 million bucks. Like that$5 million didn't just like, you know, it wasn't fake. It's not accounting loss, it's like real loss. So even if you're cash flowing a million dollars a year over five years, there goes all your profit, right? Plus all of your costs that you had, right? Like it's just like the math is so skinny and it's one hiccup away. I mean, dude, I had a client who had a potable water valve on the outside of their airplane. This is the little screw hose. When you want fresh water in your airplane, they screw the hose to the outside of it. It was$45,000 for the part, not labor, just the part. And it's like the size of a sheet of paper. Like, airplanes are really freaking expensive. So, like the minute that something goes wrong and you have to pocket it, it's like it just becomes super, super challenging.

Yeah. And I always try to tell people you're not paying for the part, you're paying for the certification or the STC. It's like, how much does a Starlink cost? You know, 300 bucks or something? Right. How much does a Starlink for a jet cost? Like 300,000? Yeah.

Yeah.

Right. 300,000. It's like, it's literally a thousand times more expensive. And it's$10,000 a month for the unlimited plan.

Yeah. I hate that they speed limited the Yeah, that was brutal. That was brutal.

I talked to the guy who like brought Starlink to airplanes, and I was like, bro, you've pissed off a lot of people. And he was like, I know, but it's a great product. I was like, yeah, yeah, yeah, it's a great product. But like, like these like Bonanza guys aren't like just rolling it. Like, you know, hitting with a thousand dollar a year a month bill is just painful. Like, I don't care who you are.

We did some surveillance work out of a 206, and we could mount it in the back window of the 206 and live stream out our video feed, which was great, but we couldn't justify it at that price. It's crazy.

Yeah. Yeah. No kidding.

Um, this one is for my friend that I'm gonna send this to afterwards. Uh he is notorious. He owns a few car dealerships, and he's notorious for searching up old, cheap aircraft and thinking it's a great idea to buy them. One time it was uh like a Lear 23 with no engines on it. Yeah. One time it was uh$600,000 Gulfstream 2 with no hush kit. Um, so can you talk about why buying cheap old aircraft is a terrible idea? Yeah.

So um, first of all, uh I like to stay live. Like that is just the reality of it. Um and when you get and and and today's and technology has evolved in such a way that it keeps you very safe, but the old technology really puts you in at risk. I mean, there's just a genuine risk there. Um let's talk about hush kits. If you don't have the hush kit, you can't land at like 40% of airports in the United States. Airplanes just obnoxiously loud and they will limit you based off and you will get fined or banned. Like I knew of a guy getting banned from Van Nuys because of his 23A uh not having hush kits on it, and they literally said, if you bring your airplane back here, we will impound it.

We got fined in the TBM 850 leaving out of I think it was John Wayne. It was like five minutes before the their noise curfew or whatever. Yep, got a fine in the mail.

Yep. They will get you. Um so I think that like as as you think about as you think about those things, um parts availability is basically impossible to find on any of those airplanes. So the minute something breaks, it may never fly again. So there goes your 600 grand, like instantly. Uh pilot availability, you can't find pilots for these things. Like one of my favorites was like somebody sent me an Astra. So Astra SP, whatever. They were like, this is a Gold Stream 100. I was like, yeah, it's an Astra, like let's be honest. Um and the reality is, is like the pool of pilots for Astros, there was like six in the region, like in the southeast. There's like six or eight dudes that are typed in that airplane. So when you want to go, it's gonna be really hard to go. Now, I want to like throw a caveat in there that there are some like spots that you can actually shoot the gap. Like there are some like citation twos, like there's plenty of pilots for those. There's some parts. There's a guy in Brooksville that like does great on engines, and you can buy them for like a million bucks or less. You can get a good deal. Like, there are like caveats to that question, but I would say like the the like 23s with no hush kits, like just don't do it. Like it's not you are in for a world of pain and probably going to lose all of the money that you put into it, if not like you'll lose 80% of it, if not all of it, within the first couple of years. Like it's just gonna be really painful, as opposed to buying something for about$2 million that has plenty of parts availability and plenty of support. And maybe if you fly it for five years, you may lose, you know, a couple hundred grand on depreciation. But like you flew a lot and it was great. It had a lot of utility for you. Like those are better buys than like the stuff that's like wildly out on the edge of the curve. Like, I think that like car dealers, like a great example, right? Because they're like, oh, like, you know, if you buy something on like off as soon as it rolls out the lot, right, it depreciates, right? Like all that kind of stuff. They're smart guys, they understand how this works. But the reality is that there is a depreciation curve on airplanes and it is steep for the first 20 years and then it flattens after that. So like you can buy some really solid 20-year-old airplanes that are like not gonna depreciate that much after you buy it. But like if you buy a five-year-old something, like you've got a long way on the curve to go down. But there is a time in which it flattens out and like, okay, it's generally gonna be worth about four million bucks for most of the rest of the five next five years. And so that's as long as I want to keep it. So, you know, you're not gonna get killed on the back end of it. So, like those I would say, like to your friend, my advice would be I get the intention and I see what you're trying to do. Don't buy something that's like less than a million bucks that's just gonna be an absolute pain. And and again, the minute you need a potable water valve that's$45,000, it is like what, 10% of the value of the plane? Like, that's insane. Like you would scrap it at that point. Um, but I see what you're trying to do. You can buy something on the backside of the depreciation curve, and you but that is still a really good buy for less money than buying something that's like brand new and shiny.

Yeah. And like we talked about, airplane parts are expensive. The hush kit for a G2 costs more than the G2.

Yeah, exactly.

Um, and then this one's personal to me. You got triggered by the airplane detailing guy. I get triggered by comments that vision jets are for people who just want to say they own a jet. And it drives me insane because people are like, oh, well, you know, you can get a TBM or you can get like it's just turboprop performance. It's like, well, yeah, that's the point. It's two million dollars less than a TBM 960.

Okay, so uh a lot of nuance to that question. Uh the other thing, have you ever sat in the back of a TBM 960? I've sat in the back of a TBM 850. Okay, same thing.

Yeah.

Uh and you ever sat in the back of a vision jet?

The second row.

Wildly different experience. Wildly different. That second row is a wildly different experience. Um way better in a vision jet, in my opinion, than in the TBM. Um different strokes for different folks. Like that's what I'll say. Like the vision jet fits a need. They need to get a little more range, they need to get a little more useful load, and then it will be the perfect airplane. Um, it's currently it is range limited. Yes. Um, yes, it is saying that you own a jet, but like the economics of it are totally different. Like the the jet stream product is better than any maintenance program that's ever been on any TBM. Like it's just it's like an extended warranty that you just pay per hour. Like you never have to think about it. That part's awesome. Um the safe return, right? Like comes for way cheaper than to get safe return at anything else, right? Like uh the um for the owner pilot, it's a tough plane to beat, especially specifically like regionally. Like I I have a hard time figuring out why people in the um it I have a hard time with people in like South Florida figuring out um how to make a vision jet work because you have to stop so many times to really get anywhere that's not inside of Florida. But like for Chattanooga, dude, you can get most anywhere in a vision jet in the South, in the Southeast, Northeast, like it's a it's a great bird for it. I think like the the argument on the jet, like while it's funny, it like makes me laugh. Uh, I just don't think that's like factually true.

Yeah. Yeah. To me, it's like, okay, I'm buying a car. Am I gonna argue over whether I have a hybrid or a V8 or a like no? I care about the car, like being it. What does the car do? Does the car go, you know, 300 miles? Does it have 300 miles of range? Does it seat all six people I want to seat? Like, I don't care what the engine is. If it has turboprop performance for turboprop price or cheaper, I'm I'm cool with that. Yeah, exactly. And you have the parachute. Okay, that was my that was my soapbox. I'm gonna get off. That's a good that's a good soapbox.

I like that. That was funny.

Final thing to wrap up. So, career opportunities. I've mentioned I have had a lot of pilots on here. I have a lot of Pilots in the audience, but for somebody who maybe either doesn't want to go down a pilot career path or they can't for whatever reason, what are some other good opportunities, maybe in sales, brokerage, management, finance along those lines?

Yeah. I mean, there's a whole world of aviation in which your pilot experience creates a wedge for you. So you think about like, I always think about like these activities or experiences, like how do I multiply the impact and effect on it? Um I think that the I think that the ability for you to be able to talk technical about the airplane is a huge unlock for finance, for brokerage, for management. Like there's a lot of different things that your pilot experience creates. Now, you still have to have, you have to have sales ability if you want to get into sales. Like there's a lot of other skills that you'll have to have or foster and things like that uh in order to get into those. But I would say like um there's a whole world out there in business aviation that is not sitting up front. And frankly, there's a lot more money to be made in some of those, in some of those professions. Some of them there's not, but there's you can make a lot more money in some of these other parts of the profession and still get to fly airplanes and still, you know, get to scratch that itch, but also like have a, you know, very lucrative career that's interesting, meet very interesting people. You know, I I I'm getting my private pilot's license not only to be able to fly myself and my family around, but also so that I can, you know, connect with my clients more, you know, on that side. So and in memory of my dad. So, you know, there's there's a lot of, you know, a lot of goodness there. But I think that the opportunity is huge for those people who have that technical skill and who want to apply uh other skills that they have in other parts of the ecosystem.

Where do you see business aviation going in the next three to five years? What's a big trend or change you think might come?

Um I think uh I think AI is a trend that is being talked about, but I think that aviation is still wildly behind the eight ball on how to actually apply it. Um I think that like operators, I would say like mom and pop operators generically are like not very good at software. Um and so like AI is just so far not on their radar, and there's a lot of opportunity for it to, you know, advance things. So like I'd say like schedulers, dispatchers, like those types of people, like tools that will empower those people to do their jobs better, I think are are a trend. Um, I think that there's a huge, I think over the next five years, you're gonna see there is a ton of uh aging out in this industry, right? There's like so much tribal knowledge that happens with these like older people and they're all kind of getting really close to retirement age. Uh the silver tsunami, right, in in aviation, I think hasn't uh hasn't worked or hasn't happened as much in aviation as it has kind of in other industries. So I'd say that like that is a huge opportunity, especially for people, like you said, right, that are trying to get into it. Like there's gonna be a lot of upward mobility for those types of folks that are looking for, you know, kind of taking over the next step in their career. So I'd say like that's another trend. Um yeah, I'd say like those are those are the two big ones that I see.

Cool. And then finally, where can people find you and any of your stuff that you're doing?

Yeah, so uh my newsletter is at PrestonHolland.com. Pretty easy to remember. I am I just changed my Twitter handle actually. So I don't know that that one off the top. I think it's Preston underscore Holland now on Twitter. Yeah, Preston underscore Holland. Uh so they have like a marketplace where you can buy handles. And I used to have like a random one, so I yeah, I got Preston Holland. Um uh I'm on LinkedIn, pretty active on there. And uh, and then if you want to find out more or want to talk aircraft finance, happy to do so. That website is prestigefinance.com. And uh yeah, looking forward to it. Thanks for having me on.

Hey, thanks for listening. If you want to hear more from Preston, I highly recommend you listen to the VIP Seat Podcast. If you want to hear more from aviation professionals just like Preston, you can subscribe to the AirPod on YouTube, Apple, and Spotify. I will see you right back here on the AirPod.