SkyHarbour Group, which leases private hangars to private jet owners who don’t want their airplanes mixing with the lower echelons of the top 1%, has set January 25th to begin trading publicly. It will be listed on the New York Stock Exchange after completing a merger with SPAC Yellowstone Acquisition Company. The fledgling provider had just under $1.2 million in rental revenues through the first nine months of 2021, its second year of operations and the latest figures available. However, it has big growth plans. From its current five locations, including two that are operational, it wants to cater to UHNW jet owners in as many as 50 markets. The proceeds from its IPO will be used to fund the next 20.
When I first wrote about SkyHarbour in September 2020, the headline read, “When A Private Jet Is Not Enough, Here’s Your Own Private Hangar.” Its Founder and CEO, Tal Keinan, says the need for his product has been amplified since then. As private aviation usage in the U.S. sets records month-after-month, the extra demand, combined with supply chain and labor issues, has revealed that its lightly used infrastructure wasn’t designed for heavy volume.
SkyHarbour Group plans to use proceeds from a SPAC-merger IPO to fund 20 locations where it will … [+]
Aircraft owners are finding FBOs struggling to handle the combined surge of transient travel with tenants using their jets more often and on shorter notice. SkyHarbour offers its clients row-style private hangars, each with its own entrance, lounge, office space and indoor parking.
While owning your jet may seem like the ultimate in freedom, parking is another story. At FBOs, you share a driveway and garage with other owners, and jets are parked wing to wing and nose to nose to maximize space. When your pilot calls to say you want to go somewhere, how quickly you can leave is determined by how long it takes to move other aircraft that are blocking yours. More jets at busy airports, out-of-service tugs waiting for replacement parts, and labor shortages can mean waiting several hours or more. With SkyHarbour, you arrive, board your jet, the hangar door opens, and you are ready to takeoff.
“There is shortage of ramp space at FBOs. There is a shortage of ground support equipment and there is a shortage of staff,” says Keinan.
Not having fast access to flying for owners of large-cabin jets, which often cost more than $40 million, is counterintuitive. At least that’s what Keinan is hoping will be the case and investors will buy. Aviation-related SPACs, like the larger market of these special purpose mergers, have been mainly underwater.
SkyHarbour brings a story. While revenues from renting its hangars more than doubled for the first nine months of 2021 to $1,186,845, expenses jumped from $2,075,804 to $8,138,911, resulting in a net loss of $8,362,364.
Proceeds from the equity offering and its bond program will provide around $800 million for future development. That includes proceeds from an initial bond offering, which raised $168 million.
Its proposition for aircraft owners is strong, particularly when it comes to efficiency, time savings, privacy, security, and making sure their jets stay in pristine condition. By avoiding foam dumps and hangar rash – that’s when your jet is bumped by another in the processing of moving it around – SkyHarbour protects the value of tenants’ airplanes. By being able to perform maintenance in their hangars, owners will find they can use their aircraft more often. Many owners of large aircraft have multiple solutions, sometimes fractional shares or jet cards for when their airplane isn’t available.
According to its most recent SEC filing, Phase I of its facility at Sugar Land Regional Airport in Houston is complete. In Nashville, it renovated an existing facility that is operational. Phase 1 of Miami-Opa Locka Executive Airport is planned for November and is already sold-out. Phoenix Deer Valley Airport and Denver Centennial Airport are expected to open in 2024 when Phase II of Sugar Land is set to debut. By 2026, SkyHarbour expects rental revenue from these initial locations of $28.2 million.
A selling point for SkyHarbour to investors could be that it isn’t necessarily competition for FBOs. Since it will buy fuel for its tenants – the primary source of revenues for the private terminals dba gas stations for private jets – the start-up will be a customer. It will also free up much needed ramp space for transient aircraft, assuming demand for private travel remains at robust levels in the long-term. It also claims a first-mover advantage as it secures limited space to build its facilities.
“There’s a bifurcation of the market,” says Keinan.
While Wall Street has seemingly turned against democratization plays like Wheels Up Experience and Blade Urban Mobility, investors will now be able to vote on whether they think the Super Rich need a better way to park their private jets.