The GFC crushed this pilot’s first venture. Now, he has a fleet of private jets

Rick Pegus has always loved the friendly skies. As early as four years old, he was entering the cockpits of TAA (now Qantas) pilots and trying to find out what makes them hum.

“They gave you a little set of wings and all the buttons. I just remember seeing the Victorian coast and thought “I’d really love to do this”, Pegus recalled.

After serving in the Royal Australian Air Force, he went on to become a flight instructor before eventually becoming the owner of a private jet company. His first company was founded right at the doorstep of the Global Financial Crisis and eventually folded. His second and current company is now four times larger than his first effort.

“We’re better for the experience,” Pegus accepted.

In this weekend’s feature story, we’re checking in with Pegus’ life, lessons from business leadership, and the changing landscape in air travel economics.

Lessons in leadership

When the Global Financial Crisis hit our shores in 2008, Pegus had just signed off on a million-dollar loan to found Skypac Aviation. That moment could have killed his motivation, but Pegus chose to look at it more as a preparation moment for future black swans.

“The biggest thing I learned was that you can fail financially but no one can take what’s in between your ears,” he said. “The GFC was good training for COVID because it was uncertain,” he added.

Managing luxury aviation companies through these two crises taught Pegus to take calculated risks. To reference rugby, it’s not about “running the ball down the middle”. Sometimes, you have to go to the corner flag post if you want to score.

Like almost every other business, Pegus and his team were involved in rent and lease negotiations in addition to receiving government stimulus during the worst of the crisis. But the biggest challenge of all was what he termed the “revolving borders” fiasco.

“One border would shut and another would open. We’d be flat out for a couple of days then nothing for a week,” Pegus said. He added the business actually grew and kept its profitability status in spite of the unfolding crisis - even if it did have its growth plans stunted.

The consumer votes with their wallet

Pegus isn’t afraid to admit that private jets are still out of the reach of the regular consumer on a day-to-day basis. But for those who want an experience, it’s not as dear as it once was.

“If you get a few individuals together to fill an aeroplane, it’s just like a business class ticket,” Pegus argued. He uses the example of getting some friends together for a trip to the Melbourne Grand Prix.

“When you get into your 30s and 40s, you wonder what you’re working so hard for. It’s not out of that person’s reach to do a one-off experience. We get people who do that all the time - like when you get eight of your mates together to go to the Grand Prix,” Pegus said.

Having said that, Pegus is not competing on price. A one-person, individual experience will likely be turned away - or as he put it:

“What we’re looking for is a strong reason to say why we don’t want to go on the airlines,” Pegus remarked.

For business customers, it’s all about the value of time.

“If you’re travelling with your team, this is the best way to travel,” Pegus said. “While it looks like you spend a little more, when you add up parking and meals and extra accommodation because you miss the last flight of the day, there’s a lot of advantages.”

“We’re a different value proposition so the price being more is not typically a huge problem.”

Dispelling the price myth

Qantas and Virgin’s massive price hikes after the border reopening have thrust the once-unthinkable into the spotlight. For businesses that need to do multiple stops on corporate roadshows or client meetings, private jets are becoming increasingly popular as a way to get around the country. And needless to say, you don’t even need to own one.

A Livewire analysis conducted by our own William Heine, paired with some quotes from Navair themselves suggests the gap is smaller than you may think. For this section, we assumed the following:

• A six person group. For the commercial airlines, we assumed they would be taking business class.
• Each two-stop route assumes intra-day travel (ie leaving and returning the same day)
• The experiment assumes flights only, and does not include accommodation or meals.
• The Brisbane to Sydney to Melbourne route assumed two days (one night) in each city before the next leg of the trip.
• All flights leave Monday 20th February 2023, all multi-stop trips end Friday 24th February 2023

East Coast

Route	Virgin	Qantas	Navair
Sydney to Melbourne	$10,788	$11,760	$10,400
Sydney to Brisbane	$6,708	$11,496	$11,100
Melbourne to Adelaide	$10,308	$10,056	$9,900
Brisbane to Sydney to Melbourne	$18,204	$43,008	$25,700

West Coast

We’ve also conducted this same experiment for travellers who need to go to Perth. While it’s the same number of passengers and approximate flight times, you will notice a yawning gap between the commercial options and the private jet. That's because most of Navair’s aircraft do not travel to Perth. Perth prices use the top-of-the-range Phenom 300 aircraft which costs more to rent.

Route	Virgin	Qantas	Navair
Sydney to Melbourne to Perth	$21,600	$27,570	$72,220
Melbourne to Adelaide to Perth	$19,578	$21,444	$73,990

There is no doubt Navair’s operating model went through some changes. Headlines about the commercial airlines being consistently late and understaffed have dominated the travel conversation. In recent weeks, Qantas has had to turn back multiple planes due to engineering or weather issues. Domestic and International CEO Andrew David responded by saying that there was nothing wrong with its aircraft.

"They were all completely different issues and I personally would be more worried about the airlines that don't turn back compared to those that do in those situations," he told 2GB Radio’s Ben Fordham. “There are absolutely no issues at Qantas.”

Nonetheless, the customer experience has shifted dramatically in a way that private jet operators have had to capitalise on.

“In the past, our biggest challenge was to create value and now, they’ve made it a lot easier for us to do that,” Pegus said. “It’s actually been a good thing for our business because it’s drawn a lot of our positives to people’s attention - especially business customers.”

Will Virgin re-IPO?

All of Qantas’ drama comes as Virgin’s owners Bain Capital look to re-float the company after two years away from the public bourse.

Reporting from the Financial Review suggests UBS, Barrenjoey, and Goldman Sachs have been appointed as lead managers for the raising.

That same report suggests that the new listing could have a starting valuation of more than $3 billion, well in excess of the revenues it made in the last half. If it comes true, it would be the biggest public debut in Australia since APM Human Services in late 2021.

An IPO would also likely give it the ammunition it needs to restart its international capacity following the Bain transaction in 2020. It would also lead to a restart just as Rex and Bonza attempt to gain its share of the domestic air travel market.