Before You Buy A Private Jet Card Membership, Read This...

By Doug Gollan, November 12, 2017

Private Jet Card Memberships can be a good solution, but there are considerable differences beyond hourly rate

 

Business aviation in America is big business, impacting all 50 states and generating over a million jobs and $219 billion in economic contribution, according to the National Business Aviation Association. Private jets are time machines, enabling you to conduct business more efficiently, spend more time at your vacation destination and give you more time to spend with your family or pursuing your passions instead of sitting in airports. In-flight time also becomes more productive, networking with customers, holding internal meetings and getting work done that’s harder to do in a public space such as a commercial flight. In fact, commercial airlines such as Delta Air Lines, Emirates, Qatar Airways, Korean Air, Lufthansa, Saudia, Hainan Airlines and even JetBlue (with JetSuite) either own or have partnerships with private jet operators. 

 

An increasingly popular way of accessing private aviation has become jet cards, which are sometimes compared to debit cards because you deposit money with the provider and then as you fly, money is deducted from your account. Jet card sellers say their programs are the closest experience to owning a private jet or fractional share without the financial commitment. That’s because when you choose a program, you are buying into that program’s standards for sourcing aircraft, flight crews and service so you know what to expect each trip. In fact, the number of jet card providers has more than tripled over the past 10 years, with more than 30 companies offering well over 100 jet card programs.

Providers range from the likes of NetJets, the largest operator of private jets in the world and part of Warren Buffett’s Berkshire Hathaway empire, and Jet Aviation, a subsidiary of General Dynamics, to brokers with less than 10 employees that go into the charter market to source aircraft. Most of the most well-known providers such as JetSuite, Sentient Jet, VistaJet, Wheels Up and XOJET are privately held. Major players in finance such as KKR and TPG are invested in the market.

In terms of convenience, jet cards save you time from negotiating price, terms, inspecting aircraft choices, arranging payments every flight as with on-demand charter. Many programs have guaranteed price and availability which make them popular with corporate buyers. Jet cards also provide varying degrees of contractual assurances in case there is a mechanical or delay, whereas with charter you are generally faced with a last-minute re-quote. “Once you have to eat a re-quote, you won’t want to do it again,” says Andrew Collins, CEO of Sentient Jet. However, in the case of jet cards many times you are talking about deposit amounts between $50,000 and $500,000. With some programs the money is refundable, with others it’s not. The programs have many variances so it’s important to do research before buying.

How do private jet card membership programs differ?

While some programs offer guaranteed availability, meaning that when you call, your provider is contractually obligated to find a plane for you, not all do. Most jet cards have a guaranteed rate while others use dynamic pricing, which means they search the market for the best rate available, which on holidays might be higher. And speaking of holidays, programs differ in the number of peak days, ranging from single digits to as many as 58 days. What’s the difference between peak days to you the customer? Typically the lead time for making reservations is longer. Surcharges range as high as 40% while others don’t have any extra charge and typically range between five and 20 percent. If you don’t fly during those peak days, it’s not a problem, but it again speaks to the need to map out your flying patterns and then take the time to compare the different private jet card programs looking at the details. The spreadsheets you have access to as a Private Jet Card Comparisons subscriber compare 65 variables for over 100 different programs making it easy to identify the programs that will work best for you.

What’s the best private jet card membership program?

It depends on your travel patterns. There are daily minimums for flight time for each program, so if you are doing a lot of short haul travel, you want to look for programs that have shorter minimums. Minimums can be as low as 48 or 60 minutes and range up to 3.5 hours. If your program minimum is an hour and a half, you are paying 90 minutes for what could be a 35 or 40-minute flight. You also need to consider how many people you are traveling with and what type of luggage you will have so you look into programs with the right type of aircraft for your needs. You also have to consider if you are happy with a size category of aircraft or do you want to have a specific aircraft type? Besides who owns the company, company size and how long they’ve been around, in addition to hourly rate, the service area is key. Some programs such as VistaJet are global, others such as Air Partner offer guaranteed pricing and availability for Europe and the Middle East. Most use the Continental U.S. as their footprint and then varying coverage of Canada, Mexico and the Caribbean. Other programs are regional. So while in many cases your provider will fly you outside the designated service area, you will have to get a separate price quote. I’ve spoken to jet card buyers who were looking into programs that wouldn’t work with them because the friend who recommended the provider was flying to different places, used different size aircraft and had different needs.

What should I look for before buying a private jet card?

It’s a fairly lengthy list. In addition to the aforementioned, you will want to look at the provider’s standards for sourcing aircraft and pilots. Some own or operate their own jets. Other programs source from the charter market. Some providers rely mainly on third-party diligence from ARGUSWyvern and IS-BAO (International Standard for Business Aircraft Operations) while others have additional layers that go into sourcing aircraft. You will also want to look at lead-time for reservations and cancellations, both for regular and peak days. For programs with guaranteed availability, I’ve seen as low as eight hours and up to 24 hours. During peak periods some programs require reservations as far out as seven days before your flight which is fine if you know your schedule is set. When you are quoted an hourly rate, ask if it includes the 7.5% Federal Excise Tax included. Are there any CPI (Consumer Price Index) escalators, fuel surcharges and other fees such as for de-icing. Is catering included, and what type? Is WiFi guaranteed, and if not, what is the additional cost? Is your money refundable? Is there an escrow account option? Can you refill your card or do you have to buy a new one with new terms? How long is your card valid and can you rollover unused funds or hours into a new one? Are there any joining fees or monthly or annual fees? How much are you charged for taxi time per segment? Can you access more than one aircraft at the same time? Can you upgrade or downgrade the size of your airplane, and is there an extra charge for doing so? Can you upgrade on peak days? Do you do a lot trips the seller qualifies as a roundtrip? Roundtrip definitions in private aviation are different than commercial, but as an example, Jet Aviation offers 40% your contracted hourly rate for roundtrips. On Light Jets, are you guaranteed a fully enclosed lavatory? Some smaller jets have wrap-up curtains and others don’t have any toilet facilities! If you are flying pets or unaccompanied minors, each company has different policies. Even private jets have mechanicals or crew can call in sick. What’s the service recovery policy of your jet card provider?

What else do I need to think about?

While booking a flight with a jet card provider takes only a quick phone call, providers such as Sentient Jet and Wheels Up have launched apps so you can book from your smartphone. Then, of course, there is the lifestyle element. Sentient Jet, Wheels Up and XOJET have extensive lifestyle partnerships, which can save you significant money with free nights at luxury hotels and discounts on watches, jewelry and fashion. Ecojets introduced debit cards where members earn cash credits for booking roundtrips, booking advance or booking older aircraft. You can use the VISA and MasterCard debit cards Ecojets issues anywhere you want for anything. Jet Linx Aviation operates its own dedicated terminals in the 14 markets it serves while Flexjet and NetJets have their own terminals at busy airports such as Palm Beach, Westchester County and Teterboro which add an extra level of exclusivity. Also, not all programs use hours as the currency. Airstream Jets pricing model is based on miles while Executive Airshare uses a hybrid of days and miles.

Do jet cards replace charter?

My experience is most private aviation users have multiple solutions. Private jet owners buy jet cards and charter when their own plane is on the sidelines or if their own aircraft doesn’t fit the needs of specific missions. Charter brokers will mainly argue against buying jet cards because you generally have to deposit six figures into an account, although there are pay as you go options. Brokers will also say they can get you better rates. I’ve found that’s not necessarily true.

Any final advice about jet cards?

Private aviation is not a one size fits all business. Just like in the world of commercial airlines, it’s rare that you will find a single airline that flies everywhere you want to go when you want to go at the price you want to pay, flying privately likely will take multiple providers. Even corporations that have flight departments and operate their own private jets buy fractional shares, jet cards and charter in addition to their own fleet. If you can find a jet card that meets the majority of your needs, you should be satisfied. Many jet card providers will quote you for trips that don’t fit into your program and there is no reason that for specific trips, you can’t call a broker to get quotes.

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