KKR is investing $150 million into private aviation firm Jet Edge in a deal that will rival NetJets and Berkshire Hathaway

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  • KKR is investing $150 million in private jet firm Jet Edge via a credit facility. 
  • Jet Edge plans to bolster its tech infrastructure and expand aircraft ownership scheme, AdvantEdge.
  • Through AdvantEdge program, aircraft owners are given transparent revenue forecasts for their planes. 
  • See more stories on Insider’s business page.

Private equity firm KKR is private aviation’s newest benefactor having just invested in Jet Edge, a California-based private aviation management firm that specializes in heavy jet aircraft from Gulfstream and Bombardier, in a deal announced on Tuesday. 

Jet Edge now has access to a $150 million credit facility from KKR’s funds. The private jet firm intends to use the investment to expand its technological infrastructure and develop a new aircraft ownership scheme, known as AdvantEdge, as private aviation continues to enjoy a rapid pandemic recovery.

It’s at least the second high-profile investment that KKR has made into private aviation this year. A $4.475 billion deal to buy Atlantic Aviation, an operator of more than 60 private terminals across the US, was also announced on Monday.

Private aviation’s recovery from the pandemic came about quicker than the airline industry’s, driven by wealthy leisure travelers that are now more willing to pay up to fly private. They’ve been a driving force in the industry and are one reason why Jet Edge is on track to achieve 40,000 charter hours this year compared to 25,000 prior to the pandemic, Bill Papariella, Jet Edge’s chief executive officer, told Insider. 

Read More: Private jet industry CEOs say business will boom as the wealthy abandon airlines and reveal what they’re doing now to take advantage

Jet Edge will likely also see more favorable pricing for Atlantic’s services including aircraft fueling, handling, and parking thanks to its new partner in KKR. 

KKR’s investment, however, is also guaranteeing Jet Edge’s AdvantEdge program that’s aimed at enhancing and providing transparency to the aircraft ownership process for ultra-high-net-worth individuals looking to charter their aircraft.

Aircraft owners in the program agree to commit their aircraft to the program for a specified period of time and are given minimum charter hour guarantees in return. Membership tiers in the program range from a minimum of 250 charter hours per cycle to 900 per cycle. 

Jet Edge says the program will give current and prospective aircraft owners a better understanding of how much they’ll earn in a given year. 

The program complements Jet Edge’s vertically integrated sales and acquisition business by giving aircraft owners a home for their aircraft to be chartered after an acquisition is made.

“This is our way of kind of turning the fractional model on its head [while] at the same time giving people access to a plane that they bought,” Papariella said. Berkshire Hathaway-backed NetJets and Directional Aviation-backed Flexjet are the current leaders in the fractional aircraft model where multiple aircraft owners invest in an airplane and share costs. 

KKR’s investment is also allowing Jet Edge to offer prospective owners a money-back guarantee with the AdvantEdge program. “If you are unhappy for any reason, we will buy your plane back at any moment at this point, underwritten by KKR,” Jonah Adler, Jet Edge’s chief commercial officer, told Insider. 

“The reality is: what we’re doing is very simple, but it’s truly revolutionary in terms of what it’s doing for whole aircraft ownership,” Adler said. 

Jet Edge’s charter customers will also see the difference when arranging charter flights. They’ll have access to some of the newest aircraft in the industry and easier opportunities to arrange flights as owners won’t need to be consulted for approval each time a trip is booked. 

Customers can access the AdvantEdge fleet of aircraft primarily through Jet Edge’s Reserve membership program where a refundable deposit is paid and in exchange, set pricing and more flexible booking terms are given. 

The push to become a high-tech aircraft operator

Investing in technology will also be a key use of the funds, allowing Jet Edge to align itself with high-tech competitors that use advanced scheduling systems and artificial intelligence-based programs to maximize fleet efficiency. 

“We will go big in tech right now, that’s for sure,” Papariella said. “You’ll see us spend millions of dollars in tech.”

Jet Edge operates a nationwide point-to-point network using its Gulfstream and Bombardier aircraft where customers only pay for the legs that they fly. Efficiently, and profitably, maintaining that type of network requires costly scheduling systems that minimize empty legs and match up Jet Edge’s aircraft with customers across the country. 

A new mobile application will also be online by December and it will allow charter customers to get pricing and reserve flights. Aircraft owners, conversely, will be able to use the app to schedule their personal flights. 

Disclosure: KKR is a large shareholder in Axel Springer, which owns Business Insider.