Private aviation supplier Wheels Up beginning April 9 will add fuel surcharges to its flights, due to rising fuel costs, company CFO Eric Jacobs said Thursday during a fourth-quarter earnings call.
"We just announced a $295- to $895-per-hour fuel surcharge depending on cabin class on substantially all flights for the first time in our history, due to the spike in fuel costs," Jacobs said. "This fuel surcharge will commence on April 9 and apply to prepaid block flights as well."
Jacobs added that the U.S. Producer Price Index for jet fuel was $2.16 per gallon at the end of 2021, up from $1.34 at the end of 2020. "The other day, the index crossed the $4 mark," he said. "If fuel costs continue to rise, we do have the ability to take further action by amending our terms of service."
Rising oil prices prompted Alaska Air Group to announce on Tuesday a decrease in its capacity guidance for the first half of the year. Major carriers have not yet announced any capacity reductions or fuel surcharges due to the rising price of oil.
Wheels Up reported fourth-quarter 2021 revenue of $345 million, the highest quarterly revenue figure it has recorded and up from $210 million the year prior. The quarter included a record for prepaid block sales, which grew more than 80 percent year over year to $540 million, said Wheels Up chairman and CEO Kenny Dichter. Full-year revenue was $1.2 billion, up 72 percent from $695 million in 2020.
The company also reported a fourth-quarter loss before income taxes of $77 million compared with a $31 million loss in Q4 2020, and a loss for the year of $190 million, compared with a loss of about $79 million the year prior.
Fourth-quarter active members grew 31 percent year over year to 12,040 total, with active users up 11 percent to more than 12,500 and live flight legs up 63 percent to nearly 20,300.
Wheels Up during the fourth quarter raised its prices, as it announced on its previous earnings call, including a 13 percent increase on cap rates for King Air jets and an 8 percent increase for its Light Jet category, implemented in early December, according to Jacobs. "We will start to see a more meaningful impact in upcoming quarters from pricing," he added.
The company hired more than 150 new pilots since its call for new pilots in November and added 40 with its acquisition of Alante Air Charter, Dichter said. In the third quarter, Wheels Up had suffered from supply chain disruptions and a pilot shortage, and as a result had curtained the ability of new customers to fly between the fourth quarter and early 2022, but "we eased those restrictions earlier than expected," Dichter added.
In January, Wheels Up announced plans to acquire U.K.-based Air Partner, giving the company a global footprint. "We are looking to close that deal in the next several weeks," Dichter said.
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