Democratizing Access to Flying Private Jets feat. Paul Svensen

We are in an industry what I like to consider works at a snail pace. For such fast jets that fly around, everything works really slow when it comes to change and adaptation.

Basically, you're kind of putting out opportunities for other firms, pilots, aircraft companies to pick up an extra passenger if it's along the route or if it's not too far out of the way.

I did grow up in the industry seeing the way things were done. The model that they created, it really was, interestingly enough, was really the Uber of private aviation before it even happened. I pictured this being a product for folks that went from JetBlue and Delta First Class, and then this is their first time flying private. And I was unpleasantly surprised of what we found.

Welcome back to another episode of the Invest Like a Billionaire podcast. I am your host Ben Fraser. Today we've got a really exciting guest, Paul Svensson. He's coming to talk about airplanes, flights, private jets, all the stuff that the ultra wealthy love to have access to. But he has created a really cool business called UberJets to really, in a lot of ways, democratize access to be able to fly private. Love what they're doing. So this is an interesting topic for a lot of our listeners that maybe have been on the fence, have thought about fractional ownership, thought about other ways to just purchase a plane or a jet. But this is a whole new model.

This is the Invest Like a Billionaire podcast, where we uncover the alternative investments and strategies that billionaires use to grow wealth. The tools and tactics you'll learn from this podcast will make you a better investor and help you build legacy wealth. Join us as we dive into the world of alternative investments, uncover strategies of the ultra-wealthy, discuss economics and interview successful investors.

So, Paul, welcome to the show. Excited to dig into this and talk about what you guys are doing.

Awesome. And thank you for having me, Ben. I've been an avid listener ever since we first kind of had an introduction together. It's been a very, very, very fascinating— I love the podcast and a big fan myself, and I follow you now as well. Thanks.

I'm glad to hear that. Give us a little background on you, on kind of how you came to the realization that, you know, this type of opportunity existed and it was needed for people and talk about how it works.

Yeah, it's a great question to start it all off. You know, it's funny, I grew up— I always consider myself growing up in the industry. My father started a company that's very well known, one of the largest ones in the whole entire private aviation industry now. Called Sentient Jet. I was about 6 to 7 years old when he sold it. So very young, maybe didn't remember all the little things, but from then on out, I basically grew up in the industry. Our family had a Challenger 601, which is a Bombardier product, and a Hawker Raytheon product, 800XP. So I did grow up in the industry seeing the way things were done. You know, the model that they created, it really was, interestingly enough, we laughed around the family table, was really the Uber of private aviation before it even happened because they did not own the aircraft. They put aircraft in a network and they still do to this day, I believe, over there. You know, he's no longer with the company as he sold it when I was very young. But they really were kind of deemed— it's even actually in the Harvard Business Journal, them basically being the Uber of private aviation or Uber of anything before it had to be done. So from there on out, I saw kind of a model that worked very well, obviously, but it did need a tune-up. We are in an industry that, what I like to consider, works at a snail pace. For such fast, fast jets that fly around, everything works really slow when it comes to change and adaptation. So I went to school basically learning a lot of technology. I found a lot of fascination in efficiency and how can we create an industry that moves a lot easier, a lot better, and, you know, a lot faster and more financially secure as well. And that's what we've, you know, basically built here at UberJets powered by Virtual Hangar is exactly what you just said, democratizing private aviation. When it first got started, I'll be the first to tell you, Ben, I pictured this being a product for folks that went from JetBlue and Delta First Class, and then this is their first time flying private. And I was on some unpleasantly surprised of what we found. And it's interesting enough that, you know, the podcast is called Invest Like a Billionaire. Well, we have billionaire clients. And it makes sense. Billionaires are smart and they know, why should I own the asset? Why should I pay all that money when I only need to pay as you fly? And that's the model that we created here. Instead of a big upfront deposit, like a lot of jet card models create and, you know, charge about $200,000 upfront for, you know, a product and it debits down, we see more of a subscription-based model and think of like a Netflix and many other subscription-based models all across the world now. But we're doing it as pay as you fly. So no big upfront, but you pay what is $14,500, which includes a $5,000 initiation fee to get started. And that is an annually after that, $9,500 at the moment, possibly going up in the future. We'll see. The product seems to be really thriving. But what that allows, Ben, is that allows folks to pay as they fly. So instead of putting up, like I said, a big deposit, if your flight's $15,000, then you're only going to pay $15,000 for what you fly. No big deposit, no waiting for anything. you know, to pop up or anything like that for, you know, no, no surprises is what we call it.

Got it. So, um, so talk a little bit about like what's existed before the pay-as-you-fly model, right? And as someone who, uh, on the periphery is interested in aircraft, but, you know, have not, you know, flown, flown private a whole lot. And, you know, I'm familiar with kind of the fractional ownership model, right? Where you can basically pool capital together and maybe you're a platform that helps you find other people to go in and, and you buy a portion of a plane, so to speak, and you get access to a certain number of hours for the, for the course of the year to use that, that jet. But the downside of that is if you don't use it, you still have the expense that goes along with that. And so, so talk a little about your model is different and And how do you actually deliver on that? Right. Because part of it is these are expensive aircraft to operate. And, you know, there's, there's a reason that the fractional ownership model works. But how are you disrupting that and how are you actually creating a model that can sustain that?

Yeah, it brings up a great question. And disruptor is the number one word that comes to mind of this. It's, you know, I won't lie, you know, I'm sure the fractional companies aren't a fan of us when you're buying a $3, $4 million fractional and when you only have to pay you know, $14,500 for a subscription-based model. They're not taking it lightly. And I don't blame them. I'd be doing the same thing. What the difference is, is what you're doing and how our, our system operates and facilitates is it's the opposite of commercial aviation. When you think commercial, you think about flying, booking your aircraft far, far in advance. So if you want to book a Delta or JetBlue flight, you think about doing it months in advance. If you're thinking about going across the country with private aviation and what we've created, it's the opposite, quite literally. I tell a lot of members, if they are comfortable with waiting 24 hours prior to book, we advise doing that 100% because it's last minute. And that's what our systems really, you know, shines at its best. What we're doing in the technology side is— I don't want to confuse everyone with the technology speak, but we're pulling a lot of API calls from scheduling software companies, FAA data feed. One topic that's been very popular recently is ADS-B tracking technology. It's another thing that we pull from. So what we're doing, example, Ben, so from say you're flying from Kansas City to Boston, we're taking aircraft that could be going Los Angeles to New York. Well, that's flying right over your head. What they're going to do is we're tracking empty ones. Those empty aircraft that are going in that same or general direction will bid on your trip and then you'll be able to select from an array of private aircraft of your choice. So no surprises when you get to the airport, like oftentimes happen with jet card models. And sometimes fractional doesn't put you on the aircraft that you actually bought. No surprises with us. You're actually going to show up on the aircraft, the exact make, year, model, and pilot experiences like what we just say when it comes to, you know, booking an aircraft through our platform. So that what makes it a little bit more different than the fractional and the jet card program. No big upfront deposits, no need to buy an aircraft, no need to pay the pilots, fix the wheel on the plane. All that stuff shouldn't be your problem when you're not flying. Only pay for why you need to fly.

Yeah, very interesting. So basically you're kind of putting out, um, opportunities for other, uh, firms, pilots, aircraft companies to pick up an extra, um, uh, passenger if it's along the route or if it's not too far out of the way. And they kind of get the incremental, um, advantage of that. And it's a much cheaper overall rate for for you because you're kind of being added to a, uh, where they're already going. I also imagine, you know, there's like in the trucking industry, you know, there's like deadheads. I don't know if that's what it's called in, um, in the airline industry where basically there's a one-way flight that's been booked, but then the pilot still has to get back to where they're going to hangar the craft. And, uh, it's going to basically have no passengers on the way back. And so a lot of what I've heard is a lot of the cost of private aircraft is you basically have to pay for a round trip whether you're going one way or not. I don't know if that's necessarily true, but I'd imagine you also, with the technology, can create more visibility into picking up some of these kind of one-ways. Is that also a part of it?

Yeah, exactly. And you did explain it very well. In our industry, it's called empty legs. So deadhead legs.

Okay.

Yep. So empty legs. You were there and it's exactly spoken the exact way you said it. You know, you couldn't have said it better. We're taking a lot of those empty legs and they don't necessarily have to be exact positioning. Remember how I brought up originally you're in Kansas City trying to get to Boston and the planes in LA trying to get to New York? It can move around to different locations. You know what I tell members all the time is when they say, well, how does that work? I say, well, airplanes fly. It just can just move to your next location, pick you up and continue on to where it needs to go. So to answer your question, that's exactly what our system does. It's picking up on What is known in the industry, this is a very interesting fact. You know, I'm not going to get into the, you know, environmental friendly side of the house, but I consider us very environmentally friendly because we're taking what is known in the industry. 40% of the private aircraft that are flying over our heads at this moment and all moments are empty. No passengers on board those aircraft. Isn't that crazy? It's a crazy stat. And so we find ourselves, you know, in a position where we're filling those And so like you said, from the owner's perspective to all our listeners who may own an aircraft, well, you're getting revenue on that aircraft that you wouldn't have had had you have, you know, continued empty. And then from our member standpoint of the house, well, you're not having to pay for the airplane to go to, let's go back to the Boston example from Kansas City, go drop you off in Boston and then fly back empty to Kansas City. You're only paying for what you're actually flying. And that's how it's kind of been a perfect marriage in between both, you know, the owners and the, you know, passengers slash members. You know, it's funny if people bring up different acronyms and you know what, what UberJets is like. I consider it more like Airbnb because you're putting your aircraft, you're putting your asset up for, you know, another, another person to, you know, utilize and you'll be making revenue on it. And this, it helps even better because it was going empty anyways, often many of the times.

Yeah, absolutely. I mean, that's a crazy stat, 40%. And I mean, that's the reason why what you're doing is actually really, really valuable for the industry, not only from an environmental standpoint, but also it's going to drive down costs, right? If now all of a sudden an owner of an aircraft can make revenue on the return flight or somewhere close to that, then all of a sudden that drives more revenue per per hour, per mile, whatever the metric you want to use, and can actually drive down prices overall, which again is democratizing kind of this access. Who are the— who are usually the owners of the aircraft? Are these like big, you know, fleets or who's, who's the owner of these?

Yeah. And that's a great question. But the reason why I really bring up Airbnb is there's individual owners. And I'll give you a great example because, you know, we had a member who had just signed up. This was a couple of years ago. He had what they call as a HondaJet. It's a HondaJet Elite is the name of the aircraft. So think like Honda, like a car, but for a jet. This is about a 5-seat passenger aircraft, smaller jet, not typical as much as used from our members as they like super midsize to heavy jets like Global Expresses. But this individual who became a member had a HondaJet. It was on a 135 certificate, which means it's charterable, and that it met our criteria of Argus and Waverun safety standards as well as our rigorous what we call Virtual Hangar Approved rating system. Just like you get out of a car service or you review a pizza. We do a review of the private aircraft and that includes interior, exterior, pilot experience and overall experience of your whole entire flight. So you have to keep a 4.8 or higher standard to keep that aircraft in the program. So back to what I was saying about our member who had a HondaJet before he was with UberJets and before he put it on what we have is the virtual hangar platform. He was only getting 10 hours a month revenue on that aircraft. So only flying 10 hours a month. As soon as he put it on a virtual hangar platform and our members were utilizing it, although it's smaller and not as popular as our, you know, heavy jets like Gulfstream and Global Expresses, he was putting 80 hours a month on that same aircraft. So as you can imagine, that's quite the jump in from what he was making, you know, with the 10 hours to 80 hours. And that's an example of an individual putting his aircraft into our program and then getting recurring revenue from that, thus taking down all the costs on an aircraft that can be upwards of $4 to $5 million. So it really makes financial sense if you're going to buy a private aircraft and you aren't personally using it for over, you know, more than 200 hours plus to put it in a program in which you can, you know, receive recurring revenue, keeping those costs down low because those costs in those aircraft are pretty They're very expensive. I just got off the phone with a gentleman. He had shattered the windshield of a Lear 60. It's just, you know, it was a bird strike. Things happen. It's rare. But that cost came out to around $80,000 to fix that windshield. And the worst part of it is it messed up his whole entire trip. And this is a personal owner who doesn't have his aircraft in our program. He's just a friend of mine. He obviously missed the whole 4th of July with this aircraft. Thank God he had a friend. But Um, you know, when it came to the personal use, it's kind of a bummer and a bummer in the pocket as well. Wow.

Yeah, I mean, it makes a lot of sense, right? If you are an aircraft owner, you got it because you wanted the convenience of, um, getting where you want in, you know, uh, when you want on your own terms. You're likely not using it a whole lot. I mean, there's probably, you know, some, some frequent users, but I would guess a lot of these owners are like you said, 10 hours a month and that's probably pretty normal. But what if they can put it in the program and like if you have a rental at a vacation spot, it's a house, right? You can do the same thing with Jeff. So it makes a lot of sense. So you're kind of creating kind of this access to airplanes that would probably never generally be, be used anyway. Right. So it's actually—

exactly. That's exactly right. And one thing that I should bring up, Ben, is we've seen such over the last couple of years A lot of our members start as members, don't own an aircraft, and they're comfortable to buy an aircraft through our aircraft marketplace that we've created because they are aware of, hey, this isn't as big of a commitment as I thought it was going to be because I have some vehicle that is going to be putting revenue on my aircraft. So we've actually seen our aircraft marketplace exchange that we've built, and I'm very proud about it. It's going to continue to increase. We're adding new features to the new app in which you can buy and sell aircraft. As well. So it's becoming very popular. But I would like to see folks who buy aircraft with us who were originally members who had, you know, kind of just tampered around seeing what private aviation was like. And next thing you know, you know, they bought a Gulfstream G200 as an example of a couple of weeks ago. So it's interesting to see.

It makes sense. You think about like from going back to the Airbnb model where, hey, someone's thinking about a vacation rental or having another property somewhere they like to go visit. And well, I don't want to buy for whatever reason, but now if I know I could monetize this asset and actually make it pay for itself or actually make money, then all of a sudden that threshold to make that decision goes down. And now that they know they can put it back on the platform and they still get the access. And I mean, I will say it's a— if you're going to buy aircraft, it's— there's some great tax write-offs and other things too you can do. So there's some benefits to owning. But the threshold kind of comes down a little bit if you can actually generate revenue off that asset to offset some of the upfront cost of that.

Exactly. You know, and you said it, you know, very, very true. You know, there is tax write-offs, but imagine instead of just having tax write-offs, you also get the revenue as well. And that seems to be where the, you know, the real, real attractiveness to that market.

So, so in this scenario where the owner is an individual and they're putting it in your platform. How do the pilots kind of fit into this? Right. Because obviously I'm assuming the owners aren't the ones that are flying the people, Cardin and Brandenburg. So how do you guys manage that? You know, there do pilots, do they basically work for your platform or how does that work? It's just—

Yeah, it's a great question. Again, what we do is, you know, I have many, many folks constantly knocking on my door, giving me calls, hey, can we be pilots on board of, you know, the virtual hangar? And the answer is we do not manage the pilots. The owners will hire pilots, whether they do it to select themselves, you know, and many don't have the time for it. You know, that's how they're able to, you know, acquire wealth and own a private jet, is they have a management company do it. And if that management company is approved by our virtual hangar platform, then your aircraft is into our platform as well. So most of the time, Ben, to answer your question, the owner will hire a management company that manages the pilots. Think like Airbnb. If you owned a bunch of houses but you don't want to be the guy dealing with all the houses, you hire a management company. It's similar, very, very similar.

Interesting. That's probably— that's similarly how the fractional ownership companies do it too, right? They usually have staffing companies for the pilots to help, you know.

That is correct. The interesting thing with fractional— and I talked about fractional, you know, to a new member who just signed up the other day. He was a part of one of the major fractional companies. And the fractional pilots go to different aircraft. When you are an owner, your pilots are assigned to just your aircraft, that same exact make and model serial number. Those pilots are always on your aircraft. So it does make it a little interesting because, you know, just like a car, think of a car, right? Not one, you know, I have an Escalade, not one of the same Escalades are the same. You know, some cars have a little finicky, try doing this. It's the same with aircraft, is that if your pilot really knows your aircraft well, that's the most trusted, you know, you feel the most safe. And that's, you know, what's interestingly enough, all our pilots, you know, are always assigned to the same exact make and model and serial number.

Yeah, absolutely. Talk about— you said you have some billionaire clients and hey, the show is Invest Like a Billionaire. But what was the appeal for them to join your platform versus, you know, having a fractional share or owning their own plane, right? What's the appeal to them?

That's a great question. The appeal to the owners are so different. Who are the members who are billionaires is so different. And the reason is they all have so many different reasons. Some are done with, you know, I just got off a call with a member who is a billionaire, happens to be billionaire a couple of months ago. I'll never forget this. He said, Paul, I'm done. I fired my pilots, I fired the maintenance guys. And I'm like, oh, well, I, you know, I don't want to put anyone in a situation where they're getting laid off or anything like that. I felt bad at first. And he said, I just don't have time for the headache and I don't want to own any more planes. It's not so much of a cost when you're a billionaire because, you know, but it's so much of how much, you know, capacity in your mind you have to handle and deal with all of that airplane stuff. And that's, you know, one reason why one, one had joined, you know, others, you know, that's an example. Some, some use it as they do own private aircraft, but they say, hey, when one goes down, give you example of my friend who the Lear 60's windshield goes down You know, he's not a billionaire, but we've seen billionaires where something goes wrong with their aircraft, where there's a small mechanical issue, maybe the tire is acting up, they need new brakes. Well, that's where they come in and we use them as a supplemental lift. So they'll use our aircraft on our, on our, on our platform. Another great example is I just talked to a gentleman. He is in— he's in North Carolina. I'm trying to remember which part of North Carolina. He owns a Citation Mustang, so a smaller private jet. And he said, Paul, I need to use you guys when I'm flying. I need more iron. He said, quote unquote, I need more iron, aka when he was flying from Carolina to California, he didn't want to stop for fuel. And that aircraft may even need 2 fuel stops. So for example, he would get on himself a Citation X. I know he's flown that oftentimes with us. And that goes nonstop. And fun fact, the Citation X is actually the fastest private jet in the world. So he'd like to move there quick and then vice versa. On smaller flights, sometimes you have owners who own, you know, King Airs and Pilatus PC-12s, which are turboprop aircraft, and they say, hey, you know, I need, I need something that's going to go nonstop. Or like I meant to say, vice versa. Somebody owns a Gulfstream or Global Express and it's just a short hop. They don't want to put all that operational cost, landings, time on the, time on the airframe, cycles on the engine just for a small hop. So they'll use us as a supplemental lift. So there's different case scenarios why billionaires would have the aircraft. And then some more— some of them are my favorite. You know, this is not just billionaires, but I have so many members and this is interesting. I really didn't think this would happen, but because you can select the year, make and model on the platform, we have some folks who go, hey, I was thinking about buying this, you know, Citation Excel and I want to fly my family around on one for the next year without actually buying it. So I'm only going to book the Excel on your platform. And then lo and behold, time goes on, they like the aircraft, they buy it, or maybe it wasn't a fit for them and they just waste $10 million on an airplane that they found out they didn't like. So again, the billionaires are interesting, the— all our members are interesting, they're smart people, that's why they're with the membership.

Yeah, it's a great way to try before you buy and write a $10 million check, right? And right, a smart guy— I know people that do that with, with Turo, which is for, for cars, car rentals, and they're looking at a different car, different makes, and they'll go and rent them in their own hometown just to try them out and see if—

Yeah, you know it before committing. I'm a big car collector. I have quite a few. And that platform to me is very interesting. I see some case scenarios where I would not want my car to be rented out to folks like that because it's a little Wild West over there. But when it comes to, like you said, you know, instead of paying $250,000 for a, you know, Bentley, why don't you try it on the app before you buy it and see if you like it or not?

Love it. So how many, how many planes do you have in the platform right now?

There's over 3,100 aircraft on the platform, uh, and that's constantly growing and sometimes decreasing because, like I said, that rigorous standard of, you know, being Virtual Hangar approved, you have to meet that 4.8 standard. So those rating systems, we really, really enforce, and we do it, Ben, because we want to make sure when we're building a community of members that they're on the top-notch best aircraft that we can possibly offer them. So if one doesn't meet those standards, we will take it off the platform. I'll give you a quick story. This is an example of another owner of an aircraft who owns a Gulfstream G4, and I spoke with his management company's CEO. Pretty big management company, one of the biggest in the country. They manage heavy aircraft. So Gulfstream, Global Express, Falcons. And I got off the phone with him and he said, Paul, I love this new platform because we get the feedback that we can actually tell the owner hey, you really do need to redo the interior on the seats, not just for, you know, Virtual Hangar, UberJets clients, but for other folks that are chartering it out. They're saying this is a— this interior is getting older, this is getting tired. So here's actual feedback from real people instead of just me, the CEO of the management company, telling you, hey, I want to, you know, redo your interior so I can make some money. It actually is coming from the consumer, which is really, really, really interesting and neat and new. No one's ever done it before.

That's awesome. Where do you see your platform going over, you know, the next several years? What's— what are your goals and where are you guys going?

Well, you know, the sky is the limit, quite literally, with UberJets and the virtual hangar. We see a model in which this is the new way. It's not just me saying it. I get off the phone call with lots of sales clients saying, why hasn't this been a thing for a very long time? My, you know, vice president of, you know, global Global Partnerships was in a one of our, one of our UberJets trucks the other days, and he gets a knock on the window and the gentleman goes, I was just on the phone about this, about him. And he goes, is this for real? The gentleman who— this was in Palm Beach, so definitely a qualified flyer and knocks on the window. Is this for real? And then pauses and says, why is this the first time I've ever heard of this? Slash, why has no one thought of this before? And it just shows you an example of it's catching on so quickly. People are finding, hey, this, this is as simple as it should be. And when it comes to, you know, like I said, the sky's the limit. We really believe in, you know, as long as the platform continues to increase and it is increasing a ton, I will tell you, a lot of businesses were hurt in COVID. We did really well. It was an opportunity for us as a smaller company at the time to really grow and find ourselves during COVID And we found a lot of folks, as we have just went through, didn't want to buy an aircraft. You know, they didn't know what the market was going to do, didn't want to buy a big fractional and didn't want to put up a big deposit. So at the time they said, let's do this, and they stuck with us. And another fun fact here, Ben, is 60% of our members come referral-based. So one member signs up, there's a 60% chance that he is going to refer another, you know, member on our platform, and which we give 3 months to both, which are pretty good. We call it our Birds of a Feather Flock Together program. And it truly is interesting to see, you know, how much the word has gotten around lately. And I think we're just scratching the surface, to be truthful.

That's awesome. Well, Paul, so fun. Thanks for giving us kind of the rundown of the industry, how you guys are changing it, and a really cool platform. You definitely got to check out UberJets Virtual Hangar. Paul, what's the best way for people to learn more about your company and, uh, become a member and jump in and, and see what, what flights are available.

Yeah, well, I invite everyone to take a look at our brand new Virtual Hangar app on both the Apple Play— Apple Store and the Google Play Store. Um, start looking at flights. Uh, we have a wonderful system that actually gives you real live flight time of what the approximate cost would be of a flight. So take a look, feel free to search around, and, uh, from there, if you like it, sign up as a member and let's get you in the sky.

Awesome. Thanks so much, Bob Fraser.

Thanks, Ben.

This is the Invest Like a Billionaire podcast where we uncover the alternative investments and strategies that billionaires use to grow wealth. The tools and tactics you'll learn from this podcast will make you a better investor and help you build legacy wealth. Join us as we dive into the world of alternative investments, uncover strategies of the ultra-wealthy, discuss economics, and interview successful investors.