Wheels Up CEO one of Wichita aviation’s biggest customers, supporters

01/16/2014 12:00 AM

08/08/2014 10:21 AM

Barry Alvarez was the new head football coach at the University of Wisconsin when Kenny Dichter, then a junior, came into his office.

At the time, “the program was flat on its back,” Alvarez said. In the year before, attendance in the 80,000-seat stadium had averaged 30,000 a game.

“Kenny came in and presented himself and said, ‘I have a feeling you’re going to win, Coach. I know you want to fill the stadium, and I think I can help you with your plan.’ He said, ‘You have to start with the students.’ ”

Dichter created a program for students called Bleacher Creature with club membership, corporate sponsors and a special section for members in the stadium.

He told Alvarez that if he put good products on the field, he would sell the stands, Dichter said.

He also worked with the athletic department to create pep rallies, including an appearance by sportscaster Dick Vitale.

It worked.

Dichter and Alvarez have been close friends ever since.

And Dichter has been marketing and “hustling and muscling things a long time,” Dichter said.

Alvarez describes him as creative and innovative.

“His mind is always turning,” Alvarez said. “He’s always trying to create something.”

Today, Dichter is the founder and CEO of New York-based Wheels Up, a membership-based aviation company serving private business aircraft passengers.

Five months into the business, Dichter already is one of Wichita’s biggest customers of business aircraft – if not its biggest current customer.

“He’s going to be a big factor in Wichita,” said Beechcraft CEO Bill Boisture.

Dichter is an advocate for Wichita, the “center of the universe of aviation.”

He also feels a big responsibility.

“We know that every membership we sell and every block of hours that we sell and every flight has a direct impact on Wichita, Kansas,” Dichter said.

That translates into airplane sales – and Wichita jobs.

Passion for the product

“I know how many jobs are related to the business,” he said. “That’s how I feel. … We carry that as a big responsibility, and we take it seriously. We have so much passion for the product that Wichita makes.”

In August, Wheels Up placed an order for 105 King Air 350i turboprops from Beechcraft Corp. – the largest general aviation propeller-driven airplane order in history, Beechcraft said. That includes a firm order for 35 King Airs and options for 70 more as the company expands.

Nine were delivered in the fourth quarter of last year. Dichter expects to take delivery of 18 more King Airs this year and another 18 in 2015.

“Wheels Up members are reacting like we believed they would react,” he said. “They absolutely love the airplane.”

He’s also working with Cessna Aircraft CEO Scott Ernest to take delivery of Cessna Citation business jets.

Those will be pre-owned, refurbished Citation jets outfitted with a special blue-and-white paint scheme and the word “Up” on the tail, along with customized interiors and Wi-Fi.

Earlier this month, Dichter flew to Wichita to meet with Ernest about the plan. Details are being finalized.

Used aircraft on the market have been slow in moving, Dichter said.

A decline of used jets on the market will help Cessna sell its new ones.

Dichter projects taking delivery of about 30 Citations by the end of 2015. He also plans to buy new Citations as demand warrants.

“We believe there’s a customer out there that wants new, that wants it all,” Dichter said.

The relationship between Wheels Up and Cessna will be good for the city, said Ernest.

“Anytime we can introduce more customers to private aviation through Citation products will be good for Cessna and good for Wichita,” Ernest said in a statement. “We believe the popularity of Citations among fleet operators is an endorsement of the value we provide to customers seeking dispatch reliability, safety, comfort and superior direct operating costs.”

By the end of 2020, Dichter expects the company to take delivery of 150 King Airs, 120 to 150 Citations and, through a partnership with Vista Jet, 35 to 40 Global 4000, 5000 and 6000 long-range business jets.

Currently, Wheels Up is ahead of its business plan.

It now has more than 200 individual and more than 20 corporate members.

Dichter projects 350 to 400 members by the end of March and more than 1,200 members by the end of the year.

“We’re growing fast and furious,” he said.

‘Imposingly forthright’

Dichter was described recently by Corporate Jet Investor as a “sports-loving, streetwise businessman; fast-talking, almost imposingly forthright.”

It’s an apt description. He’s a bundle of energy and knows no strangers.

“The wheels in his head are always turning,” Alvarez said.

It’s difficult to be in his presence without picking up the positive energy and joy he gets from business, Boisture said.

“If you’re doing business with Kenny, he expects it to be good; he expects it to be tough; he expects it to be profitable; and he expects it to be fun,” Boisture said.

At the same time, “he’s a very thoughtful guy,” Boisture said. “He’s a visionary, in my view. He’s able to see a different order of things that exists today, and he’s able to see a new order of things that responds to the current socioeconomic environment. He’s able to see them in such a way to have a vision of a different business. That’s what he’s doing with Wheels Up.”

During the big snowstorm this month that canceled thousands of flights and stranded passengers, Dichter appeared on CNBC’s Fast Money saying Wheels Up might be able to help out.

Dichter urged those who were stuck someplace to give them a call.

The phone lines lit up.

Dichter grew up in Long Island, N.Y., loving basketball and lacrosse.

During his days at the University of Wisconsin, Dichter, a sociology major, began selling T-shirts out of his dorm room. That grew to three retail stores and a wholesale business.

In 1996, Dichter co-founded Alphabet City, a sports marketing and music company. Two years later, it was acquired by Robert FX Sillerman’s SFX Entertainment. Dichter stayed on until SFX sold to Clear Channel Communications in 2000.

It was with SFX that he met the who’s who of the sports and entertainment worlds. He was also introduced to the world of private aviation flying with SFX executives.

Dichter soon realized there were three ways to buy private aviation – own your own airplane, buy a fraction of a plane from a fractional jet ownership company or charter an airplane.

“There needed to be a fourth,” Dichter said.

In 2001, Dichter came up with the concept of a jet card, called MarquisJet, allowing fliers to buy as little as 25 hours of flight time on a private jet.

Brick in the pyramid

“We created a brick in the aviation pyramid that didn’t exist that had all the creature comforts of fractional (ownership) without the long-term commitment, without the asset exposure, without having to be subject to the assets depreciating,” Dichter said.

At that time, Boisture, then president of fractional ownership company NetJets, met Dichter, who was working to persuade NetJets chairman Richard Santulli to let him sell the excess capacity on NetJets’ fleet through the jet card business.

“At that point, we had significant excess capacity,” Boisture said. Santulli gave Dichter the go-ahead.

“He put together an extremely good team of salespeople and drove a tremendous amount of volume in a relatively short period of time,” Boisture said. “The Marquis concept was so successful that it had literally filled up the excess capacity we had at NetJets. It was a big move on his part, and he made it happen.”

Dichter marketed MarquisJet to professional athletes, movie stars, musical artists and others who, because of their notoriety or the need to move around quickly, didn’t want to use public airports, said Alvarez.

At one time, MarquisJet cardholders included about 100 professional golfers.

“The list goes on and on,” Alvarez said. “He could name-drop all day.”

In 2010, Dichter sold MarquisJet to NetJets, a Berkshire Hathaway company. Dichter stayed on as vice chairman for a year to help with the transition.

In those 10 years, jet card sales totaled $4 billion.

Along the way, Dichter co-founded Tequila Avion, a premium brand tequila, and Juice Press, a Manhattan-based grab-and-go organic, raw food and juice company.

He’s also created SportYapper, a global communications platform for talking sports; CYC, an indoor cycling studio; Cirrus, a fitness company specializing in exercise equipment; and Tour GCX Partners, a golf membership program that gives corporations and individuals access to private country clubs.

In August, Dichter announced the launch of Wheels Up with the big order to Beechcraft using the King Air as foundation.

Members pay an initiation fee, an annual membership fee and an hourly rate for the use of an airplane.

Fliers pay $3,950 an hour of King Air time, a price much lower than a jet, which makes private aviation affordable to a broader base of customers, Dichter said.

To launch the company, investment banking firm Jefferies put together $100 million in credit.

Wheels Up also has more than 300 investors, including members of the Forbes list of billionaires, entrepreneurs, professional sports team owners and players.

Dichter put up $10 million of his own money.

Building a business

For Dichter, the most fun part of business is building the organization and the system.

“The way I judge a successful business – are my customers happy?” Dichter said. “If the customers are happy, they’ll always allow you to make a fair profit margin … for the service you’re providing them.”

The toughest part, especially in a start-up business, is maintaining balance between work and family.

Dichter and his wife, Shoshana, have three girls, 13, 9 and 6. Shoshana is senior vice president of communications.

He’s a cautious investor.

“If I don’t get a good gut feeling about a project, I usually stay on the sidelines,” he said.

His biggest strength is his loyalty, he said. “And it’s my No. 1 Achilles heel.”

He wants to give employees and partners the benefit of the doubt.

“It’s one thing as an entrepreneur that I have to work on is making sure I move when it’s time to move,” he said. “My loyalty holds me up from doing that sometimes.”

His motivation comes from inside.

“I look at businesses like a big canvas, like an artist would,” he said. “I can’t wait to wake up and paint. It’s the pursuit of the perfect picture.”

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