What’s the true price for the jet membership provider’s new shared charter service?
On Tuesday, as Private Jet Card Comparisons reported, JetSmarter announced it was launching SHAREDCHARTER, a new way for its community of 10,000 private jet travelers to dip into the sharing economy and fly more for less. The press release and a video by its founder and CEO Sergey Petrossov are big on promises and short on details, something that has become their hallmark.
In a video to members Petrossov promised the new service will “save up to 90% of charter cost.” But who saves? And what do they actually get? And is it really 90%? Also, how does JetSmarter charter pricing, which requires you to join as a member costing from $5,000 to now $50,000, compare to on-demand charter.
According to Petrossov:
“With Create Your Own Shuttle (CUSTOMSHUTTLES) you can choose your takeoff time and aircraft time but are limited to the proximity of Shuttle routes. With our new SHAREDCHARTER service you have the flexibility to fly where and when you want regardless of where you are going and when you want to get there, but with the major valued added benefit over private charters.”
After you’ve set your flight itinerary and chosen how many seats you need then JetSmarter will invite other members to purchase your extra seats and for every seat sold you’ll get reimbursed in flight credit. It’s automatically adjusting in real time. It will be available globally and it will save up to 90% of charter cost. Those other 10 seats become Jet Deals and as they are booked the flight credit is automatically added to your account.”
We found an example of a SHAREDCHARTER flight from Ft. Lauderdale to Napa, California leaving 7 a.m. on August 14 aboard an eight-seat Hawker 1000. For members who want to book seats on the flight, they were being offered at $3,723 per seat. For the flight starter, the person who booked the entire charter, it appears they would be on the hook for $29,784 or possibly a bit less, which would represent the cost of the full plane one-way including 7.5% Federal Excise Tax. We say that because it looks like JetSmarter in pricing its Jet Deals doesn’t just divide your total price by the number of seats. That said, it appears to be a minimal difference.
In this case, if you had chartered the aircraft, needed two seats and sold six, you would have spent $29,784. If JetSmarter sold the open six seats, it would have gained $22,338 in cash from other members, and you would get that same amount in future flight credits. Obviously, if the seats weren’t sold, you would not get the credits.
The particular flight we looked is to be flown by a 1992 Hawker 1000 operated by Maine Aviation. On its website, the company says that plane is based in New York, although its owner seems to also have a South Florida residence. It says the normal rate for that aircraft averages $3,500 per hour nationally. The plane, tail number N207TT, seems to keep an active schedule. Flightaware shows it flew 15 legs between June 30 and today, July 14, 2017.
According to the departure and arrival times posted by JetSmarter, the block time will be 5 hours and 18 minutes, so if you rounded up to 5 hours 24 minutes (charter is often priced in increments of 12 minutes) and added 12 minutes of taxi time, a fairly standard industry amount, you would have 5 hours and 36 minutes of charged time. At $3,500 per hour, that would work out to about $19,600 to charter the entire plane directly from the operator. Of course, there could be ferry fees to get the plane back to the East Coast and landing fees, etc. so the price JetSmarter is charging for the entire plane is probably reasonable.
On the same day, we were able to price out our own SHAREDCHARTER on a Super-Mid leaving South Florida for wine country at noon, which came to $28,023 for the entire plane, including FET. According to the JetSmarter app, it would sell additional seats at $3,724, so if it sold six (we only wanted two), it would gain $22,344 in cash and we would get the like amount in credits. We didn’t see details on who operated the aircraft or how old it was. By the way, the best price JetSmarter’s app would give us for a 7 a.m. departure was $43,713 for an unspecified Super-Mid.
We looked around at 7 a.m. and found via online broker Stellar.aero, we could get a Mid-Size 1998 Hawker 800XP for $33,740 operated by Windsor Jet Management with a block time of six hours. We also looked at online broker Stratajet.com and the best price it gave us for an aircraft that could fly the route nonstop was $36,362 for a Challenger 604 delivered in 2000. We put in a request to XOJET, which has given JetSmarter its exclusive digital distribution rights, and were emailed that an “all-in” quote would be “27-28k depending on a few factors.” When the quote came back it was $25,469.67, including FET for either a Challenger 300 or Citation X. All of the above is a good example of why many private aviation fliers have multiple solutions, for example, fractional shares or jet cards, and then still play the market to see if they can get certain trips at better rates than what they have contracted via pre payment programs.
At any rate, if you were buying a Jet Deal, the terms state you cannot cancel the flight and the amount paid is non-refundable, so assuming JetSmarter sells the extra six seats, by lunchtime on the 14th, they would have pocketed around $50,000 in cash, and the flight starter would be holding $22,338 in credits. We spoke to a JetSmarter rep who said it is the same if you are initiating a shared flight, so the advice is not to do it until you are 100% sure of your travel times.
JetSmarter’s terms state no refunds or compensation are given for changes in aircraft type or for substitution of services to a scheduled air carrier, per the contract we reviewed. In terms of getting refunds, per the contract, your only chance is if JetSmarter changes the origin or destination or changes your scheduled departure by more than 48 hours. JetSmarter can also increase your charter price by up to 10% up to 10 days prior to departure. It can also cancel your flight within 10 days as long as there are “circumstances that make it physically impossible to perform the charter flight or causes beyond its control.” We’re not aware that any of this is common practice, and Petrossov recently told us their renewal rate is over 90%, still, it gives the provider lots of wiggle room.
To fly commercially in first class from Ft. Lauderdale to San Francisco International, there are only two nonstop flights that day, one by United Airlines for $504 and the other from Virgin America prices at $700, so two seats flying in first class commercially is $1,008 to $1,400 and you will still be a couple hours from Napa versus the two Jet Deal seats for around $7,400. At the end of the day, you are probably saving a solid four hours on this particular routing, cutting a 10 hour trip to about six hours, including airport time, so the question becomes is four hours of your time and picking up half a day in Napa worth $6,000 for you and your traveling partner?
We spotted two other SHAREDCHARTER flights posted, both operated by a 2008 Hawker 400XP from Travel Management Company, LLC, which owns its fleet and sells on-demand charter. The first leg was from Augusta, Georgia to Cobb County Airport with seven seats, apparently selling two Jet Deals for $388 per seat. The flight is scheduled for 3:30 p.m. on July 15 landing just after 4 p.m. There is then another SHAREDCHARTER, this one from Cobb County to Westhampton Beach, New York departing at 7:30 p.m. Two seats were being offered at $1,264 each.
We sent three emails to JetSmarter, including copying Petrossov on the last one, asking about how credits can be used, applied and limitations, plus we left messages for its PR company but received no responses. Perhaps they weren’t happy with our last article pointing out their continued challenges with clear and candid communication.
At any rate, according to a poster on Flyertalk credits can only be used $3,000 at a time.
“ It could be pretty revolutionary if they get the volume of flights. I’m not sure how effective it will be in its present incarnation though, because a) only other JS members can buy seats, and there’s only 10K members; and b) You can only use $3K in flight credit at a time. So if the FLL-APC guy gets his $3727 * 6 = $22,338 in credit, he’ll need to use that over 8 subsequent flights, which might be a lot to ask.”
We were curious if the credits can be used against shuttles, such as between New York and London where a one-way rate of $6,888 is posted. It would also be interesting if the member could apply the credits towards annual membership fees, buying Jet Deals or an amount higher than $3,000 for a full charter.
After a bit of digging, some emails and phone calls, we understand it goes something like this:
- Simple Tier members who pay $5,000 per year to join JetSmarter can’t earn any credits by selling seats even if they charter a full aircraft, so really, why bother?
- Smart Tier members who pay $15,000 per year to join earn credits and can use them with a $3,000 per transaction cap.
- Sophisticated Tier members who pay in the range of $50,000 to join earn credits and can use them with a $6,000 per transaction cap.
We are told that the credits don’t have an expiration date, so as long as you remain an active member they stick with you, But it is possible JetSmarter can change the terms at their discretion. We don’t know enough to make a conclusion one way or another.
You can’t use credits for cancellation fees, memberships or membership renewals. You can use the credits to buy seats, including extra seats on shared charters and empty leg flights as well as any full aircraft charter you initiate, shared or not. We were told you can also use credits against catering and helicopter transfers.
JetSmarter claims the top 1,000 of its 10,000 members spend an average of $140,000 per year with the company. We don’t see this program, offering credits, not cash back, encouraging much in the way of newcomers to full charter. Our perspective is that it will be up to these top spenders to decide if they want to start selling seats. Otherwise, SHAREDCHARTER is more likely to be a niche product, much more expensive than most shuttle and empty leg deals for the aspirational flier, and without enough savings to make full aircraft charter affordable to the next rung below that top 10%.
Like much of what JetSmarter announces and offers, we like the concept. Like much of what JetSmarter does, we have concerns about the way it is done.
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