Sramana Mitra: This $68,000 that this guy paid you, what value did he receive for that? It’s not like there were lots of other jets that he could fly on.
Ferren Rajput: The membership locks you into x number of hours that you can utilize. Every time you book a flight with us, you would pay the discounted direct operating cost of that flight.
Instead of paying a charter rate of $6,000 an hour for a light jet, our members would pay around $3,000. It doesn’t cover the actual cost that we would pay. We would pay about $5,000. The membership is a fractional component of that $5,000 cost to us.
Sramana Mitra: I understood that. But you don’t have any other aircraft on your system.
Ferren Rajput: This is not about having aircraft on our system. We have access to those aircrafts.
Sramana Mitra: How do you have access to other aircrafts? How does the first person get access to hours on other aircrafts when no other aircraft is signed up with you?
Ferren Rajput: I don’t have to have the aircraft signed up. The industry operates on direct clients and brokers. 65% of the industry is booking private jets for charter through brokers.
Sramana Mitra: So you’re a broker. You don’t need other people to sign up.
Ferren Rajput: Correct. If he books a flight with me, I am buying the flight and reselling it to him.
Sramana Mitra: Got it. When did this first guy sign up? How long did it take to get this first guy?
Ferren Rajput: It took us about four months.
Sramana Mitra: That’s still in 2010?
Ferren Rajput: Yes.
Sramana Mitra: How did this ramp up?
Ferren Rajput: In 2011, we signed up an additional 13 or 14 members. Roughly, a member a month. Then the business started to grow.
Sramana Mitra: The margin sounds low.
Ferren Rajput: We’re talking about anywhere between 5% to 8% margin. It’s not much. The objective is to improve on the margins and to get a lot more volume. In 2011, we did about a million dollars. In nine years, we have grown to over $30 million.
Sramana Mitra: The model is still the same?
Ferren Rajput: It had to be revised. It’s still the same model in the form of a membership. In 2013, others followed suit. Today most of the industry is flying on membership versus fractional.
Sramana Mitra: How many members do you have today?
Ferren Rajput: We have about 500.
Sramana Mitra: The entire business today is still on this 500 members, or is there any other business model?
Ferren Rajput: It’s the same model.
Sramana Mitra: How many private jet owners are in your target market?
Ferren Rajput: Our target market only sustains about 5% to 8% owners. Majority of the marketplace is not the owners. If you’re not flying over 250 hours a year, you don’t need to own a plane. The majority of the people that we deal with are people who fly about 50 hours a year.
Sramana Mitra: My question is how many people are there whom you are trying to sell your membership services to?
Ferren Rajput: We are looking at about 40,000 people that are in this marketplace.
Sramana Mitra: That’s quite a bit.
Ferren Rajput: We think we can take that number up to north of a hundred thousand because of what we’re developing.
Sramana Mitra: You have not raised any outside financing?
Ferren Rajput: Correct.
Sramana Mitra: Congratulations on getting back on your feet. It’s a wonderful story of resilience. Thank you for your time.