Elevate Holdings promises to acquire Keystone Aviation ‘first of many’

Not very well-known Elevate Holdings, Inc., the New Hampshire parent company Private Jet Service Group, promises its acquisition of Keystone Aviation is “the first of many”. It starts the year with the likelihood of more M&A activity, and it also brings a new player to the deal market.

Greg Raiff, founder and CEO of Elevate and PJS Group, says he believes there are many small operators ripe for consolidation, but not big enough to grab the attention of the big players.

In the past several years, Wheels Up Experience has acquired Delta Private Jets, Gama Aviation Signature, Mountain Aviation and TMC Jets while Vista Global Holding has grown with XOJet Aviation, Red Wing Aviation and Talon Air. Directional Aviation, parent company of Flexjet and Sentient Jet, FlyExclusive, Jet Linx Aviation and Jet Edge, have also made acquisitions.

Yet the 30 largest companies in the charter and fractional market control less than 30% of the market, with Berkshire Hathaway’s NetJets, Inc., including NetJets and Executive Jet Management, holding a dominant 11% share.

Keystone will add 13 charter jets to the six Elevates and, in the fragmented US market, will likely place it among the top 20 players. The planes range from large-cabin Gulfstream and Bombardier long-range jets to Pilatus PC-12 single-engine turboprop aircraft. According to Tuvoli, a payment service provider connecting brokers and operators, only around 60 charter operators have at least 10 jets in their fleet.

For Elevate, Raiff says the deal is fundamental to achieving its vision of having a vertically integrated business aviation service provider. The private group was founded after selling a $ 7 million spring break travel business he started while attending Middlebury College. Until the launch of a jet card program in 2015, PJS mainly focused on VIP charters of large planes for sports teams, live entertainment tours, political campaigns and corporate shuttles.

With Elevate, he expanded into aircraft management, which he hopes to boost with the acquisition of Keystone. While Elevate operates planes at various locations, Keystone had focused on multiple bases in the West. Raiff says bringing the two approaches together is “like combining peanut butter and chocolate.”

The deal also adds Keystone’s maintenance and repair organization, something that is becoming increasingly critical. Operators without in-house maintenance find it more difficult to reserve slots for repairs as MROs struggle to rehire staff and supply chain issues delay spare parts.

“We believe the business aviation industry needs a supplier large enough to deliver large-scale benefits to its customers without sacrificing the personal touch so essential in a high-end service business,” adds Raiff.

While refusing to disclose revenues, the deal will double Elevate’s workforce to around 200 full-time employees. Keystone’s management will remain in place, says Raiff. The company is working on branding, with Elevate remaining the holding company, Keystone as the operator and management arm, and PJS as the brokerage firm. Additional brands can be developed for other segments of the business.

The latest deal comes as private air travel to the United States is reaching record levels. Argus TraqPak expects January flight to be 38% higher as 2021. WingX data shows that charter and fractional flights have been up 71% during New Years week compared to pre-pandemic 2019-2020 numbers.

Record-breaking demand and supply chain issues have meant that jets that were previously available in the large charter market are now reserved for the use of members of the acquirer’s jet card programs. Wheels Up has for example more than 10,000 members.

Raiff says that in the cases of PJS and Keystone, the two units will operate separately, “with each branch making the best decisions based on the needs of its customers, not some type of business synergy game.”

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