00:13:30 · Molly O'Shea, Israel Slodowitz
[00:13:30] S1: Go through the different prices of Citation G450. We obviously just went through Global eight thousand, but maybe just talk through the starter kind of prices. [00:13:42] S0: First of all, there's a journalist called Doug Gohlen who has a website called Private Jet Card Comparisons. He does a great job. If you are very serious about flying private and you do want to get the latest pricing on jet cards and different aircraft categories, highly recommend looking into Doug Gollin. But I think the pricing is somewhere around $7,500 for entry level light jet per hour to fly, about $9,500 an hour for a midsize. So most people are actually buying not something they can't buy new, they don't buy new. Because buying new is like very, very expensive. But if you're buying sort of pre owned airplane, a light jet will run you around 3 to $5,000,000. A midsize something like this will be anywhere from 10 to 20 and a heavy jet maybe 20 to $30,000,000. Just the sticker price just to get into airplane. Buying the plane is just the beginning of the journey, right? That's the cheapest part of owning a plane. Then you have the pilots, the fixed cost, the mains cost, the fuel cost. You're probably looking at anywhere from 2 to $4,000,000 a year to run the plane just to keep it running for you. So as you could see, it's very expensive. Unless you really have a need for it or a real business need for it, it's something that a lot of people will do and then they'll swear off of it.
00:15:07 · Molly O'Shea
[00:15:07] S1: Since we just went through what full ownership looks like, let's get more to what people really, most people actually do. And so there's a couple different options where you can charter, you can get a jet card, and then you can also do fractional ownership. What can you just define for people who don't know? Define what each one of those are and then how the pricing changes.
00:15:29 · Israel Slodowitz
[00:15:29] S0: Yeah. So typically, the way people first experience private aviation is maybe they've heard of, like, an empty leg. Right? They've jumped on an empty leg. What an empty leg is is where the plane maybe has one trip landing in LA, another trip the next day is departing out of San Francisco. So the plane will need to move or reposition between LA and San Francisco. And sometimes companies will sell that as an empty leg and and for a significantly reduced price because they have to go anyways. So sometimes people get experience to private aviation through these empty legs, but I think it's probably worth glossing over because it's not really the utility and the reason people would fly private. Right? Like, an empty leg is more of a luxurious, more of an experiential type of transaction. People buy airplanes or people fly private. They typically do it as a utility, as a way to conduct business or for ease of comfort with their family. And they wanna be able to go on their schedule. They don't wanna be flying on someone else's schedule. So typically the way somebody will enter the market is through charter. Usually the first taste they'll have in private aviation. We operate a charter company. We charter our airplanes out. Chartering a plane can be great because you don't have all the commitments, but you really have to be careful of safety. It's very hard to know what you're gonna get and the prices can fluctuate quite drastically. So one day it might cost you like $12,000, the next day it's costing you $24,000 for the exact same flight. So a lot of times people will charter and then say, you know, why are the prices fluctuating so much? And then they'll upgrade to what's called JetCard. I'll explain to you what a JetCard is. A JetCard is essentially prepaid charter. So you're giving a deposit to somebody and they are essentially sourcing charter for you at a fixed price. So rather than one day paying 12,000, the next day paying 24,000, they'll charge you $18,009.09 9. Right? And and you'll pay for both flights $18,009.09. So actually, you're actually paying a little bit more than you would have paid during charter, but you at least know when you wanna fly, it's gonna cost you $18,009.09. So you're really getting essentially more expensive charter.
00:17:48 · Israel Slodowitz
So it's it's it's and and and also, JetCard is typically like where you'll first maybe get a taste of a NetJets or a Flexjet type of experience because they offer JetCard services as well. So that's typically where you'll maybe first enter into the bigger leagues of flying private. And then where does fractional come in? So fractional comes in really at the next step. Fractional, so maybe you flew some charters and didn't like that you kept getting different airplanes and different prices. You got a jack card and and you just gave them a massive deposit and you realized it wasn't that much better than Charter. So you decide, okay, now I wanna like maybe move to the ownership side of the aisle. And fractional is really on the ownership side of the aisle. So the main difference in the two is that on the fractional, you know, you're you are carrying the residual risk of the plane. So if the airplane depreciates, that the cost of the depreciation, the cost of capital is essentially on your dime, not on the charter company's dime. So you're getting a more consistent experience. You're getting an ownership type of experience. So you're getting a a premium sort of product, but you're also paying a premium for it because you hold the, essentially, the residual risk of the aircraft. So fractional and the two largest providers is NetJets, and then second largest is Flexjet do a phenomenal job, and you can essentially buy a one eighth or a one sixteenth of a plane. They'll manage all the operations, the pilots. You'll never have to worry about maintenance. Plane will be there at hours or twenty four hours notice, and you're sort of
00:19:28 · Molly O'Shea, Israel Slodowitz
[00:19:28] S1: getting a a taste of of ownership. You run a charter business. How is it different? [00:19:33] S0: Basically, there's two sides to craft. There's our operating business, which is somewhere in between the fractional and the JetCard. We're mostly a B2B company. We sell to all these other larger companies, which are brokers on these platforms. But what makes it interesting is that we actually because it's an operating business and we generate cash, we are able to run this exchange fund, which is a completely separate financial product that's designed for people that have low basis stock. Exchange fund are you familiar with exchange funds at all? Yeah. Yeah, yeah. So exchange funds, a simple way to explain it is 10 people come together with 10 different stocks, and they all contribute a stock into a fund, and they all get the benefit of owning. What people don't realize is that unless you have an operating business to run it through, like you have a business, You have income, you have cash flow, right? So you have a business you're running everything through. Unless you have an operating business to run it through, there aren't really any tax benefits. If you're like a SpaceX employee and you have a lot of stock, you don't have a business to run this airplane through. So not only are you paying sticker price for the flights, but you're actually paying almost double that because you have to sell stock to fund it. So this is, I think, one of the problems with this new massive wealth creation.
00:19:33 · Israel Slodowitz, Molly O'Shea
[00:19:33] S0: Basically, there's two sides to craft. There's our operating business, which is somewhere in between the fractional and the JetCard. We're mostly a B2B company. We sell to all these other larger companies, which are brokers on these platforms. But what makes it interesting is that we actually because it's an operating business and we generate cash, we are able to run this exchange fund, which is a completely separate financial product that's designed for people that have low basis stock. Exchange fund are you familiar with exchange funds at all? Yeah. Yeah, yeah. So exchange funds, a simple way to explain it is 10 people come together with 10 different stocks, and they all contribute a stock into a fund, and they all get the benefit of owning. What people don't realize is that unless you have an operating business to run it through, like you have a business, You have income, you have cash flow, right? So you have a business you're running everything through. Unless you have an operating business to run it through, there aren't really any tax benefits. If you're like a SpaceX employee and you have a lot of stock, you don't have a business to run this airplane through. So not only are you paying sticker price for the flights, but you're actually paying almost double that because you have to sell stock to fund it. So this is, I think, one of the problems with this new massive wealth creation. [00:20:54] S1: And just the onslaught of Silicon Valley becoming so big and all these with huge equity values.