Surf Air has switched the operator of its California flights for the second time in a year. It comes after two new route announcements that never took place and recently filed tax liens totaling nearly $2.5 million
Just over a year ago aviation industry veteran Jeff Potter was CEO of Surf Air, which at the time was seemingly shedding its training wheels and showing it could be a sustainable enterprise following a period of tumult when its founders left and then filed a $125 million lawsuit in 2015. Then came the acquisition of RISE, which was operating a similar concept in Texas. That is, you pay a monthly fee and somewhat like Netflix indulge as much as you would like, however, instead of movies, with Surf Air and RISE it is flights (see below), mainly short hops where you can save a lot of time by using private aviation terminals instead of the commercial ones.
Around the same time Potter left, Sudhin Shahani, the chairman, an investor, and tech entrepreneur, took the role of chief executive. Last summer, there was the seemingly ham-fisted launch of flights in Europe with its own Embraer Phenom 300 neatly painted with a shiny black exterior and former senior British Airways executive Simon Talling-Smith at the helm. According to LinkedIn, Talling-Smith still holds that position, although he is now seemingly leading VOY, a blockchain based loyalty program Surf Air said it was launching last month.
Back to flying: Following the launch of summer routes from London to Ibiza and Cannes in 2017, there were plans for more of the Phenom 300 light jets and a fleet of Pilatus PC-12 turboprops. There was a map of Surf Air’s network in Europe (below) with a half-dozen current cities and nine future destinations, none of which has been realized, at least in the way it was presented.
Surf Air’s model, which originally entailed operating at least some of its flights, has changed too. Aviation International News last November reported Encompass Aviation had “quietly” leased Surf Air’s 12 Pilatus PC-12NG turboprops and had been flying its 70 or so daily flights in California since May 2017. It came out earlier this year that Surf Air had contracted Tradewind Aviation to handle the former RISE flights in Texas. Then in the early hours of this Saturday morning just after midnight, we received a press release reading, “Surf Air transitions operations to Advanced Air for California routes.”
According to the release: “Continuing the company’s mission to build the best travel network in California, Surf Air, the innovative all-you-can-fly membership air travel company, announced the expansion of its partnership with operator Advanced Air today. The partnership between the two companies began three years ago, and with today’s announcement, Surf Air will transition more flights to Advanced Air, including San Francisco and Los Angeles area flights, as well as, San Diego, Santa Barbara, Las Vegas, Monterey and Napa flights. Advanced Air also owns Hawthorne private airport, which is presently one of Surf Air’s busiest destinations.”
In the release it was noted there will be a change in the aircraft members fly. “Advanced Air will serve Surf Air’s membership with a combination of their own and Surf Air branded aircraft. Surf Air preferred members will also benefit from favored price access to Advanced Air’s charter fleet, including the King Air 350, Pilatus PC-12 and Learjet 45,” the release stated.
What led Surf Air to Advanced Air? According to the release, “Advanced Air’s commitment to safety is what is most appealing for Surf Air. The company is ACSF registered and has received a Platinum rating from ARG/US, the world’s most prestigious third-party vetting system for charter operations. Less than 4% of all operators worldwide meet these safety standards.”
As of this morning, the Encompass website (above), which is now branded ROAM by Encompass, still reads, “Roam currently operates under a long-term contract with Surf Air providing all of their transportation in the state of California, but we’re always looking for our next great partner. If you’re interested in partnering with us, please get in touch!”
As you might have guessed, Surf Air’s move was a surprise to Encompass. Its CEO Steve Harfst confirmed to Private Jet Card Comparisons he remains in that position, his company continues in business and referred us to its outside counsel, Leonard Klingbaum of Wilkie Farr & Gallagher, who said, “Encompass is in the process of taking all available remedies…They owe us significant amounts (of money) and we intend to pursue them to recover all amounts owed to us plus damages.”
Klingbaum said the six Surf Air PC-12 planes remain in Encompass’ possession and it continues as of this morning to employ the pilots who were flying Surf Air passengers as of Friday. He said Encompass wasn’t notified until Friday evening, adding, “It came as an absolute surprise.”
Advanced Air offers its own by-the-seat private jet charters from Hawthorne Municipal Airport near Los Angeles International Airport, flying to Las Vegas McCarran, Monterey and Napa County airports. According to its website, Advanced uses private jet facilities, meaning that passengers can show up just 20 minutes before departure. Like JetSuiteX, Tradewind and now JetSmarter, its scheduled semiprivate flights don’t require a membership fee to book.
Regarding safety, its website reads, “Advanced Air has 3 of the highest safety ratings a corporate operator can achieve. ARGUS Platinum, Air Charter Safety Foundation and ISBAO Stage II. Less than 20% of operators can claim this level of safety and our safety systems are audited by a 3rd party every 12 months.”
Levi Stockton, president and chief pilot of Advanced Air, said while there are no flights scheduled today, as of tomorrow, Surf Air customers will not see a difference and that Advanced has sufficient aircraft of its own to fly Surf Air’s current schedule. He said Advanced has had a relationship with Surf Air ongoing flying several routes and fill-in flights when needed. He also said Advanced is planning to expand its own by-the-seat flights.
Surf Air New Routes That Never Fly
Several months ago, Surf Air was selling to prospects the supposed details of its long trumpeted expansion in Europe which weeks later proved to be nothing more than letting members book seats on JetClass, which charters private jets for scheduled flights and then sells seats on those flights without a membership. Shahani said although Surf Air may take delivery of additional aircraft, its plan moving forward was to have them operated by third-party operators. It also struck a deal with FlyBlade giving its West Coast strong membership base access to Blade’s mainly Eastern network during the summer months.
Currently, on the European website, I couldn’t pull up any routes. Earlier this spring when they came clean the expansion was based on buying seats for members on JetClass, Surf Air said it was at least temporarily stopping London flights which were using its own aircraft. It was a 180 degree turn from March when Talling-Smith teased us telling us there were a slew of new routes, including: Zurich – Luxembourg, Zurich – Milan, Zurich – Munich, Zurich – Brussels, Zurich – Vienna, Milan – Geneva, Milan – Nice, Milan – Zurich, Milan – Basel, and Brussels – London, much of which apparently never came to be and what did was the JetClass flights. In other words, it doesn’t appear Surf Air is operating or even contracted with operators to provide flights dedicated for its members in Europe.
After its June 2017 acquisition of RISE, there were similar claims about expansion with the announcement press releasing stating, “As part of the agreement, the combined entities also announced plans to quickly expand to additional markets within the next 18 months, including: Las Vegas (NV), Bentonville (AR), Midland (TX), New Orleans (LA), Scottsdale (AZ), and Taos (NM), with certain membership levels offering weekend service to Cabo San Lucas (Mexico), Aspen (CO), and Sun Valley (ID).” OK, it’s only 12 months, however, it is not clear that any of the proposed routes have been added, which may go to what one defines as “quickly.”
In the press release announcing the transfer of California flights, Sudhani said, “This expanded relationship is a logical step to broaden the value proposition Surf Air can offer its clients. Pairing the best regional charter operators of short-haul flights with the Surf Air model is highly complementary and can open up the path to future expansion.” The release also said Tradewind will continue to be Surf Air’s Texas operator.
Surf Air Tax Liens
Documents obtained by Private Jet Card Comparisons show IRS liens against Surf Airlines, Inc. filed on May 11, 2018, for $1,896,390 in taxes for 2016 and 2017. An apparent second Notice of Federal Tax Lien was filed on May 29, 2018, in the amount of $433,933 also for 2017. The IRS notice reads in part, “We have made a demand for payment of this liability, but it remains unpaid. Therefore, there is a lien in favor of the United States on all property and rights to property belonging to this taxpayer for the amount of these taxes, and additional penalties, interest, and costs that may accrue.” An accountant who reviewed the liens said he believes it was for unpaid federal excise tax that could have been collected by Surf Air, but never remitted to the government, or that the company could have failed to collect the tax in the first place.
While it’s strange to put out a press release after midnight on a Friday, at least one you want people to read, it’s hard to know exactly what’s happening at Surf Air these days. The model of outsourcing flight operations to a third party in private aviation is not unique. Wheels Up uses GAMA Aviation to operate its Beechcraft King Air 350i, Cessna Citation Excel/XLS and Citation X fleet, while VistaJet uses Jet Aviation to operate its U.S.-registered aircraft. JetSmarter has entered an arrangement with Jet Edge to fly aircraft it has leased from owners. Obviously, the changes in operators, direction and vapor route announcements should make one cautious. In terms of risk to you, the consumer, one industry executive who is familiar with the players said Advanced is well positioned to ensure service to Surf Air members in California since it already operates in the space. Surf Air’s memberships range $1,950 to $5,000 per month. Surf Air didn’t respond to our requests for an interview.
Updates: Sunday, June 17 @ 8:34 am: A spokesperson for JetClass tells us its arrangement with Surf Air continues in Europe