The Exchanges

Q How big of a difference did it make on the business or at least the experience when you guys got Starlink?

A A huge difference. We, we've been operating Starlink from basically the moment that they came out. We started off with the Starlink minis, and then eventually when they got the full certification, we installed the full certification right away. Um, but, uh, uh, it is a, the only, the only way to describe it is a game changer. Like, people today won't fly if you don't have Starlink. They won't get on the plane. To be able to continue what you're doing, like, if you're having Zoom calls, just be able to have that continuity. You know, these other, the other, the other systems out there, like, they're, they have good Connectivity when you're in the U.S., but they kept, they have lags. They work, and they stop working, they work, they stop working. Starlink is just, like, an absolute game changer, and all of our aircraft have Starlink, and I think there's a, a dish right there.

AI assessment note: “A huge difference. We, we've been operating Starlink from basically the moment that they came out.”

Q Do you have to put that in an LLC? Like, does that, how do you actually make that, like, tax advantage?

A Yeah, I mean, typically all, all aircraft are in a, uh, single purpose LLC, like an SPV, and they'll usually be, like, under the business. So an LLC, it's owned by the business, and then the LLC will have a lease agreement in place with the business for tax efficiency. But, yeah, so I think, like, on the, on the other side of the spectrum, owning an airplane's complicated. There's a lot that goes into it. We'll talk more about that. So we're seeing people that are even flying 300 hours a year. They're like, I don't want to deal with owning a plane. And I think actually, like, that's one of the big differences in this new generation of wealth. These people don't want complexity. Most of them are able to book well in advance. They're not last minute people. They're, they are willing to book seven days in advance, two weeks in advance. They don't need that four hour call out most of the time. If they do, they can find out other options. Um, and Those people would rather simplicity, ease of use. They don't want to deal with the complexity of owning a plane. So, so in some cases, even above 300 hours, it doesn't always make sense to own, but typically, you know, in that sort of range, the second reason you own a plane is for cost efficiency. So once you start hitting the 250 hour range, the cost of owning and spreading the pilot costs and all the fixed costs around, uh, around one a…

AI assessment note: “typically all, all aircraft are in a, uh, single purpose LLC, like an SPV”

Q So what is your favorite type of plane?

A We said you think you can guess. So what do you, what do you, what would you guess? There you go. Well, I've had a different aircraft. I mean, I flew the Gulfstream G five 50. It's an American bill airplane. You could tell it's American bill. It's like driving a GMC. Everything is just so big. Everything is like the throttle lever is like this big. It's like, you know, everything is just like, you think they have double, they have quadruple for everything. Um, so I, I really love that airplane. The challenger is just an amazing airplane. I mean, this was, this was my first like real jet I ever flew. Um, and, uh, and it's such a capable mission oriented airplane, but there's nothing like taking on a small little Cirrus and Flying around the mountains and, um, going to, going to small little airports and, you know, there's nothing like really getting to experience and enjoy flying. You know, in these airplanes, you don't really enjoy flying as much because it's very, very process oriented. You get in the cockpit and they have a, there's a script and a checklist and you follow the flight plan. The autopilot's flying most of the time. It's very, uh, very like man, you know, not, not very manual. Uh, you don't really get to enjoy flying.

AI assessment note: “there's nothing like taking on a small little Cirrus and Flying around the mountains”

Q So are you gonna, like, like, are NetJets, FlexJets, are you, are, like, is Aero, like, are they, they're just all gonna increase their prices substantially? Like, how does that work?

A Yeah. I mean, I think there's already, we're already seeing like massive wait lists at these fractional programs. Like the, the, uh, the line to get, uh, to get, to get into, uh, an aircraft is maybe two, three years at a time. If you wanted to order a plane right now, a brand new plane from Bombardier, they'll probably take you three to four years until like, I think they're delivering now into, into 20, 30. Right. You can always find, like, you can actually buy a slot from somebody. So somebody else who got, was in line, people are actually like reselling these slots. Because people want like planes sooner. So there's already like a huge, huge demand for these aircraft. And we are seeing the market price of them trade a little higher over time. But again, like at the end of the day, they do depreciate. It's not, the aircraft are not like real estate, right? They do depreciate over time. They get wear and tear, they get fatigue. And then at some point there's a newer airplane with a better, a better like sound system or something that, you know, that people like and, and zero windows, zero windows. Yeah. And over time, the value that airplanes will go down, but we have been seeing in the last couple of years, like a very weird phenomenon where the price, like we bought this airplane and now it's worth like more than we paid for it.

AI assessment note: “we are seeing the market price of them trade a little higher over time”

Q So Preston makes a lot of content around the financing of private aviation. What does he mostly cover? Like, what should people be reading?

A Yeah. So Preston Holland, he has a podcast. He talks about aviation finance in general. He's a broker. So he's good. If you're looking for, if you're looking to buy a plane, you're looking for a loan, he'll help you find a bank. Financing a plane is kind of like financing a car, right? The bank, a bank will want to securitize the aircraft. They'll file lien on the airplane. And then they'll also want to look at your personal financials and make sure that you have the ability to repay the loan. Financing fractionals a little bit more difficult. So if you go to like NetJets, for an example, they have their own in-house financing department, so you can get a loan there, but most other fractionals, there's only a select few banks that will, that will do finance. Actually, a fun fact is that only 30% of aircraft have Loans on them. Really? Yeah. Um, 70% of people closing cash. Um, and a lot of it has to do, it's just very difficult to go through the process, get a loan. A lot of people don't want to like personally guarantee these loans and how they're just closing cash. Don't want to deal with the hassle. I'm working on a company right now called Radar, which is focused on providing financing for people who want to do complete asset back, like no PG, non-recourse type loans for aircraft, because they are really good assets to finance against.

AI assessment note: “He talks about aviation finance in general. He's a broker.”

Q money, and so with these conversations I've been trying to get down to, okay, what do you do once you have that wealth? How do you manage it? And one of the topics in the conversation on wealth management Is private aviation. So I'm really excited for, to talk about this today, and I'm just really curious. So are we seeing more private jets? What's the state of the market?

A Yeah, I mean, so it's, like you said, it's absolutely insane what's going on right now. We're sitting here on a Sunday. SpaceX is supposed to IPO this Thursday. So some of our clients and a lot of our investors are going to be in New York for this iconic IPO. It's probably the largest IPO by twice as much as the last one. And this is just the first of many, right? OpenAI just announced that they're going to be going public. And we're seeing, like, not just an insane wealth creation moment, probably the largest we've seen in the history of humankind, but we're also seeing a shift in how people spend their wealth and their priorities, and also the type of wealth that they are generating. It's not the same wealth that was generated historically, where people kind of built a business over many, many years, and they slowly diversified.

AI assessment note: “we're seeing, like, not just an insane wealth creation moment”