With today’s news that Delta Airlines is acquiring a majority interest in WheelsUp, the world’s largest airline continues its path to rationalize its operating portfolio by merging Delta Private Jets into the WheelsUp organization. The statement by Ed Bastian, Delta’s CEO, highlights the airline’s desire to expand its footprint beyond its current commercial aviation market further into private aviation. The question remains as to Delta’s long-term private aviation strategy with this merger and whether this new WheelsUp entity will offer enough differentiation against NetJets in the private aircraft market.
The world of private aviation has become quite crowded in recent years, with a wide variety of business models vying for a static set of target customers. The creation of a 190-aircraft fleet with this merger seems to be aimed at the “last mile” segment of well-heeled North American clients, and Delta is most likely looking to capture a larger share of the longer-haul travel segment by offering a larger variety of options on “last-mile” services on private aircraft. Surely this is one way to broaden the DL service base to more North American cities.
A greater cynic than I might look at this transaction as a further effort by Delta to rationalize its core businesses by getting out of the increasingly competitive private jet market. Delta needed a home for its 90-aircraft private jet fleet and WheelsUp was a more than willing recipient of this transfer. Will Delta get fair market value for its fleet in exchanging it for majority ownership in WheelsUp?
A shake-out of the private aviation market is inevitable, but in the meantime, look to this transaction to benefit Delta’s premium travelers looking to get to commercial aviation’s underserved markets. This can be a more time-effective solution for some of these last-mile locations.
How will this impact your business travel decisions?