From a $27,500 Charter Company to a $4 Billion Private Jet Giant | Kenn Ricci, Flexjet

Kenn Ricci turned a $27,500 charter firm into Flexjet

Kenn Ricci built Flexjet by copying a proven model, leaning on balance sheet strength and treating every deal as a way to build a business he loves. He lost control of his first company, then bought it back after the financial crisis and added Flexjet. He applies the same trust to his family by sharing wealth with his children early.

Takeaways

• Give wealth to children while you are alive. Ricci says withholding financial details tells children they are not trusted. He started a family limited partnership in 1990 with yearly meetings on estate details. His children agreed any investment is shared, with the investor putting in 60% and offering 20% to each sibling.
• Build capability instead of buying it. Ricci says the balance sheet matters more than income in aviation and that he dislikes mergers because they damage culture. He says 90% of the time a company could build the capability itself rather than acquire it.
• Flexjet grew through exclusivity and slow integration. Ricci gained Gulfstream exclusivity and now operates 85 of them. Merging the two businesses took four years, the pilots' union was removed, and the company quadrupled in size over the past eight years.
• Taking Flexjet public would have been a mistake. Ricci calls his attempt to take Flexjet public a $30m mistake. He kept it private because he believes there is a purpose beyond wealth accumulation, and says his personal wealth is about 40 times its 2006 level.
• Private equity turned airport services into a duopoly. Ricci says private equity consolidation left the fixed-base operator industry a duopoly, and he criticises its event fees. Small operators were bought at six times EBITDA at the time, against 15 to 20 times today.
• Customer service is how you handle failures. Ricci says service is about what you do when things go wrong. Flexjet staff can comp a trip of up to $300,000 without supervisor approval, which he presents as the core of the company's service philosophy.
• Wealth should not run your life. Ricci says a 1992 decision to give away his assets was meant to prove wealth would not run his life, and a spiritual turn around 2018 followed a talk with Father Ted Hesburgh. He says he became successful because he loves to fly.

How Ricci built Flexjet

1. At 26 he bought the remaining aircraft of J and J Aviation for $27,500 and renamed it Corporate Wings. Celebrity charters, including Richard Branson, gave him early contacts and capital.
2. He copied NetJets, which Richard Santulli built on fractional ownership, but used older aircraft at half the buy-in price under the Flight Options brand. Warren Buffett's $750m purchase of NetJets in 1998 helped him secure almost $300m of debt.