“Start counting when you hear the engines—one-one thousand two-one thousand. Just count to five and then…see you later,” says Bill Papariella, CEO and founder of Jet Edge, as we taxi onto the Santa Rosa airport runway. Before I can complete the count to six, the Gulfstream is shooting upwards on the way home to Los Angeles.
“At 51,000 feet flying long range you can go up to the front of the plane and see the curvature of the earth. You’re sipping fuel because the air is so light the plane is like a missile. This plane costs $2400 an hour to operate at 51,000 feet,” says Papariella, whose company provides end-to-end global aircraft management specializing in large cabin aircraft, primarily Gulfstreams, an approach that has given Jet Edge a competitive advantage, driving down costs.
“I own the company outright with one partner, Richard Bard, who is chairman. He has taken five companies public. He’s an operator. Every business I’ve done he’s funded it and been a part of it. When I was in movie-making, he funded Ninth Floor Media. And then Story Bay.” Operator, indeed. Bard served as Chairman of the Federal Reserve Bank of Kansas City, and created the Bard Center for Entrepreneurship at the Business School of the University of Colorado at Denver.
Papariella spent many years as a movie producer. But after a head-butting session in the business over his disruptive company, Story Bay, he left for a sales position at Marquis Jets, learning a new trade from two of the legends of private aviation, Richard Santulli, who pioneered the concept of fractional jet ownership, and Kenny Dichter, now CEO of Wheels Up.
“Transition from the movie business was much smoother than I would have thought…economy was robust in 2005. At Marquis, we developed sales channels relating to entertainment. Actors, producers, attorneys, they’re usually guided by large CPA firms—business managers control the spending. If you get in with them, you can get 15 clients in a day. My book was a lot bigger than anyone else’s at Marquis. When Marquis merged with NetJets, our CEO, Richard Santulli, stepped down. I thought, ‘Richard Santulli is already gone, Dichter is heading out.’” Time for something new.
“Jet Edge was not doing well and was for sale, in theory,” says Papariella. “It was primarily a maintenance company. Richard and I bought it. From there we have been on a rocket ship. We are extremely transparent in our transactions. In this industry, there is not a lot of transparency. When I worked for Warren Buffet, Santulli and Dichter, integrity was not in question. You sold the deal the way you should sell the deal. In aircraft management that is not always the case.”
Every entrepreneur needs that first big client, and Papariella found one in Bill Foley of Fidelity National Financial and Black Knight Financial Services. “Jet Edge is the house that Bill Foley built. I called and asked for the business and six months later I had it. Everyone saw that.” It never hurts to have a billionaire West Point graduate as your first major client.
“Dave Austin, who runs our airplanes, knew Bill from NetJets,” says Bill Foley. “Dave recommended we go to Jet Edge, a good partner for us. They take that extra time when our planes are not flying and put them with good customers who appreciate the aircraft. We have seven aircraft with Bill. We fly each airplane about 500 hours a year. We are not flying on weekends and holidays, and Jet Edge fills in that time. For us it’s a great way to offset the cost of private aviation. I can do three days worth of work in one day when I have an airplane at my disposal," says Foley. "My guys use these planes like crazy. They might start in San Diego, go to Orange County, then the Central Valley, then the Bay area and end the day in Portland."
“When we started Jet Edge, it was ‘Do whatever you need to do at any cost.’ The first five years have been entrepreneurial. I cared about top-line growth, market share. I didn’t want to lose money, but I didn’t care if I lost a little here and there. If I lost a hundred grand on a deal, it didn’t matter.”
Jet Edge is entering a second phase. “Once I got to scale, that changed. We got to a point where we started to optimize the business. You start to look at it more analytically.” Papariella had to grow quickly. Scale brings survivability in what remains a turbulent business. “If you’re not at scale, you’re done. First downturn, you’re done. We don’t do a lot of M&A in private aviation.
“Jet Edge is still in its infancy. We will be at 60 planes this summer, five years in. From four planes to 60, from 2 million in revenue to more than 100 million in five years.” Part of that success comes from Papariella’s focus during the initial growth period on one brand, Gulfstream.
“We’re expert in Gulfstreams. I have 27 of the same aircraft and I can get everything cheaper. There’s a lack of complexity.” Maintenance is performed almost entirely at the OEM level, by Gulfstream. Companywide Papariella spends $45 million annually in maintenance. The company has moved into both Dassault and Bombardier jets, but with a measured approach, careful not to upset a winning formula.
“When you’re operating on a large scale, it doesn’t matter where the customer is in the world because our fleet is global. A client might call and need a large cabin jet out of New York. We have several options right there in the city ready to go. Ultimately, a charter client really doesn’t need to know where the aircraft came from as long as it meets our strict standard in terms of offering the highest quality and safety.
“We manage aircraft for incredibly successful individuals and companies, but we do not own the planes. Our business model is simple: we help our clients buy and sell their jets as well as manage all operations for them. When these aircraft aren’t flying our clients around the world, Jet Edge opens them up to charter. Everyone wins. Our charter customers receive award-winning service while the aircraft owner enjoys a consistent revenue stream to help offset the not insignificant fixed costs. We do 28,000 hours of flying. We’re in Los Angeles, Miami, the Bay area, New York, and Asia. When our jets are up in the air, the owners are happy.”
Lessons learned in the hustle of Marquis Jets and under the guidance of aviation superstars Santulli and Dichter have paid off in company culture. “We try not to be too corporate,” says Papariella. “We strive to be professional. I think there’s a very distinct difference between the two. Like in the NFL—if everyone stays in their lanes at kickoff, we’re going to meet our objective.”
Jet Edge was one of the first private airlines approved under the FAA’s ASAP program [Aviation Safety Action Program]. ASAP allows companies to anonymously self-govern and self-regulate themselves without penalty. “The program is terrific in that it allows us to find out what is really going on in the fleet with complete honesty,” says Papariella. “Only our head of flight operations is privy to the information. It allows employees to speak to the FAA anonymously without pushback and that ultimately elevates the quality of our operations.
“We were one of the first four companies worldwide to hold all of the highest safety accreditations.” Those are ARGUS Platinum, Wyvern Wingman, IS-BAO Stage 3, and ACSF Registered. “IS-BAO is the world standard for private aviation. It has three stages. If you have one, you will get flights. If you get two, you’re pretty good. Number three is so hard almost nobody has it. We have it. It’s like three Michelin stars. Argus Platinum is difficult, and we have that, too.
“And we participate in the entirely voluntary FOQA program [Flight Operations Quality Assurance]. We’ve tapped into virtual reality by simulating, in 3D, all the important details about how our planes and crews are flying as recorded by the aircraft’s position, instrumentation, and navigational sensors. And the plane is sending signals to maintenance about what might need to be checked once the flight is complete.”
There are two ways to work with Jet Edge. “I can sell you the plane, or you have one already,” says Papariella. “I find that selling the plane is a better value proposition. I buy the plane and put it in the system.” Jet Edge is a ballsy operation, and that’s reflected in the client base. “Almost every owner I have is a guy who came from nothing. They’re all self-made, like Bill Foley. We have 23 billionaires in our data base.”
Jet Edge generates charter hours via large external sales organizations and through in-house retail sales. “The reason we are so good at generating these robust external sales channels and experience such success is because we deliver a safe, hassle-free high-end experience,” says Papariella. “Our fleet size also affords our clients a one phone call solution. If a jet is unavailable for some reason, our fleet size affords our clients several back-up options that help lessen or eliminate delays altogether. Time is a client’s most precious commodity.”
View the full article at forbes.com