Portside and Business Aviation
a chat with their CEO, Alek Vernitsky
Every company aspires to unicorn status. But, there’s a way better metric for gauging the enduring importance of a company: the corporate jet. Corporate jets are synonymous business importance. Look no further than the fact that 356 of the Fortune 500 own at least one.
But the Fortune 500 isn’t the full picture in business aviation. The Fortune 500 only account for 3% of business flights per year.1 The business aviation market is vastly bigger than you might think. In fact, 85% of business flights stem from small and medium-sized businesses.2
There’s over 5,000 non-commercial airports in the US (a 10x difference versus commercial airports), over 1.2 million people employed in the industry, and the sector itself is growing at solid clip.3
Despite the status symbol private jets have become, that has never been their primary purpose. As American business evolved and aviation took off, businesses quickly realized the benefit of private fleets not confined to a certain schedule.
This compounded post-WW2 with a veteran workforce that had flown missions over Germany coming home looking for jobs.
And while there were plenty of early business jet manufacturers, the business aviation era boomed with the launch of the Gulfstream II in 1966. For the first time, a large-cabin private jet could do Transatlantic flights.
Business aviation’s importance has only sky-rocketed since then.
Fast forward to today, the demand for business aviation is greater than ever. So too, is the operational burden.
What amazed me while chatting with Alek Vernitsky, the CEO of Portside, is how little corresponding technological investment went into software to alleviate the operational burden.
Pen and paper might have worked well in the 90s when planes were cheaper and only flew roughly a hundred or so hours per year. But in the modern day, planes are now far more capable, far more expensive, and in-flight time has boomed.
The current business aviation market comprises three different use cases. The most basic: a business or individual purchases a jet outright (Part 91).4
For non-serial flyers (150 hours or less in flight time per year), chartering a flight will usually suffice (Part 135). Lastly, NetJets and other fractional platforms have carved out the space between the one-off charter and the owner with a fractional ownership models or jet cards (Part 91k). It’s essentially a timeshare for the sky.
And then there are cargo aircraft, utility construction and inspection, off-shore oil & gas, firefighting, and a myriad other less well known segments of the business & government aviation industry. Corporate flying is just the most visible tip of the iceberg.
All of these imply somewhat different booking strategies, but they all invoke the same back office challenges.
In every case, a flight department must staff and schedule pilots and crew, manage the flight, and handle all the various intricacies that come with aviation.
This would be more manageable if we were dealing with large enterprises. You could throw bodies at the problem and have it all work out. But we aren’t. The vast majority of these aviation companies are regional SMBs. They can’t afford the headcount that the current operational landscape is demanding. And while all of this is plenty to manage, we still haven’t even touched upon the customer communications that are critical to the business.
Portside’s thesis is that all of these problems are addressable within one platform.
Alek is no stranger to aviation. This is his second time in the space. And when he dug into business and government aviation, plenty of these challenges became evident.
Perhaps the biggest problem on the software side of the industry is the dozen existing software providers. They were all small and none of them had the expansive vision or capacity to build a true platform. At best, they were point solutions to service one aspect of scheduling, billing, flight planning, trip planning, staffing, or communications. Aviation operators were left to cobble together a solution from myriad point tools.
Alek decided to change that. And so Portside has built an all-encompassing platform that can help aviation companies optimize aircraft usage, manage the complexities of operating, and communicate effectively with their customers.
Portside initially anchored around white space. There was no compelling solution enabling aircraft owners to schedule their travel and view relevant insights into finances, usage, maintenance, and more.
Not only does this provide value for a previously untouched workflow, it allowed Portside to build out the relevant integrations and data model for business aviation.
A great calendar implies integrations into an aviation management company’s flight scheduling system and scheduled maintenance systems.5 Aviation specific billing implies integrations into expense management and accounting systems.
A corporate shuttle or request system for a Fortune 500 customer implies integration into corporate HR systems
The point is that nobody had ever attempted to view integrations as principal to the product value. But by focusing on the communications problem, Portside naturally built these out and had a natural path to becoming a true platform. And when integrations are treated as a primary driver of the business value: it naturally opens up opportunities to acquire some of your integration partners.
With the relevant integrations built out, Portside has been able to accelerate into back office workflows. They’ve had a two-fold strategy here spanning both internal R&D and acquisitions. Where there is a highly nuanced product that is accretive to the platform vision, they are happy to purchase. They’ve done this with BART and Professional Flight Management. Both of these solutions handle different scheduling needs within the industry, spanning both small and large operators.
Even this past week, they’ve announced a new licensing agreement with Avianis, one of the premier flight management systems.
All of this starts to add up to where every highly-nuanced segment of the market can have an all-encompassing solution. In each case, Portside’s proprietary portal accrues more value as the central source of truth for each workflow.
Lastly, Portside has begun to make moves to serve more problems in the industry, first honing in on staffing.
Pilots are hard to come by. Often private aircraft can be spontaneously booked and it’s hit or miss if you can get a pilot. To solve this, departments want flexibility in their pilot and crew staffing - some contractors, some full-time.
Normally with a contractor, you would put them on a 1099. Due to industry regulations and the required training, this is impossible. That means creating a liquid labor marketplace requires some managed services often fulfilled by agencies that hire the pilots directly and manage compliance.
The genius behind Portside’s staffing marketplace is that they are creating this in a fashion that synergizes with the rest of the Portside offering. Hire through Jet Aviation Staffing (or other agencies) and all the relevant staff information, scheduling ramifications, and more will natively integrate into Portside’s platform.
Along with the efficiencies this creates for Portside’s customers, this invokes a certain virtuous cycle for Portside’s platform.
Portside doesn’t solely help you manage your opex, it helps manage human capital as well. And because all these workflows synergize together, the more you use Portside, the more value you get.
Now that Portside has developed a cohesive platform vision for business aviation management and owners, it makes sense to parlay this into other segments of the industry.
As previously mentioned, jet cards have become increasingly popular in the industry as a way for private flyers to have more certainty around their potential flight schedule. Pre-purchase a certain number of flight hours per year and you can ensure you will always be able to book a flight.
These services have injected far more liquidity into the business aviation market. You could easily imagine two things happening. First, more owners would love to tap into this market and lease out their plane with more certainty around plane utilization. Second, if more regional aviation management companies offer these products, it could theoretically increase the demand from businesses that are somewhere in between sporadic charters and full ownership.
Portside is perfectly positioned to help companies capitalize upon this. They’re already enabling fractional jet platforms to build out the right features through their calendaring and back office primitives.
Portside is already powering a few fractional and jet card operators.
Alek suspects that cargo, aero-medical and offshore helicopter operations are next.
My guess is many of these are private equity, oil and gas, or capital allocators of some sort.
2020-21 in business aviation was an anomalous year where private flights exploded. Even post-Covid (and ZIRP), the current quarter has the industry up 15% over 2019.
Every one of these has a specific set of regulations adding to the complication. These part sections have become the industry vernacular for distinguishing use cases in software.
It’s non-obvious to consider calendaring as a core primitive. But it absolutely is in this use case. Cf. Cal.com as the open-source primitive to build this into platforms. I think it’s a very underrated unlock.