The Liberty Gazette
September 6, 2016
Ely Air Lines
by Mike Ely and Linda Street-Ely
Linda: A tweet (as in Twitter, social media) shared by a co-worker showed a picture of a promotional sign advertising a certain service by a relatively new company. What was unusual about it was that particular sign in that particular store.
Costco Wholesale, “a membership warehouse club, dedicated to bringing our members the best possible prices on quality, brand-name merchandise”, has the large membership it does in part because of good prices. So we often think bargain when we think of Costco and other wholesale clubs.
But then there’s the other piece - quality brand names. And these days, it’s not only merchandise. As we recently saw from that tweet, Costco is advertising services, too.
For those who travel by air frequently there are some reasonable options to airlines. Of course, learning to fly would be tops on my list, but a company or individual could also buy an airplane (or helicopter) and hire a pilot, charter a flight, or, that person or business could join a club. We call it a fractional share and there are several such companies built around variations of this concept.
One of these, Wheels Up, explains their uniqueness: “Unlike with traditional fractional or jet card programs, joining the Wheels Up club does not require a significant up-front financial or long-term commitment. You aren’t purchasing an asset, you are joining a club. For a reasonable initiation fee and low annual dues, you become part of an exclusive private aviation network, providing aircraft at reduced rates with guaranteed availability. A Wheels Up membership means guaranteed occupied hourly pricing on a pay-as-you-fly basis, paying only for hours flown, no hidden charges or unnecessary management or service fees.”
Sound nice, and even though the initiation fee may be reasonable and the annual dues low, the invitation to be in an exclusive private anything is alluring to most folks.
The lower priced option at Wheels Up is the Individual or Family membership. Corporate members will, of course, pay much more. But a person can join for just $17,500 (that’s the reasonable initiation fee), and then only $8,500 per year dues. That entitles the member to guaranteed flights with 24-hour notice, which, of course, will be paid for per flight. Sounds good, and there are lots of folks for whom this works out well. I wonder though, how many of them shop at Costco?
If you’d asked me that last week I might have had a different answer. But now knowing that Wheels Up advertises at Costco I am going to assume they’ve done their market research and that there are enough Costco members who could also be Wheels Up members.
So far, 2100 members have joined, giving them access to a fleet of 55 airplanes already at the company’s disposal, with an Uber-like app that facilitates passenger-flight matches.
So business aviation is now on sale at Costco. Kudos to Founder and CEO Kenny Dichter for growing the business aviation market in innovative ways. Now even $17k private airplane subscriptions are sold in bulk on pallets at Costco. Impressive.