What’s the best way to charter a private jet? Brokers often say on-demand charter beats jet cards. We look at the case one broker is making.
Needless to say, jet cards have been the hot spot of private aviation with the number of providers and programs having more than doubled in the past 10 years. Earlier today we received an email from a charter broker outlining its case against jet cards. Our position – despite our name – is that it’s not a black or white answer, but we were interested to see what the arguments were and to add our thoughts.
The e-mail was titled “5 Reasons to Stay Away from Prepaid Jet Card Programs” so we decided to review them one by one and offer our thoughts.
- Flight Hours are Defined in Advance
Your flight hours are prepaid with the jet card program. While this is advertised as a budget-friendly option — because you have a fixed cost — it may be difficult to pinpoint your flight hours. For example, you could have a busy year where your business aviation needs increase to 20 hours. Then, the following quarter you only required one hour. When flights through the year are unexpected and inconsistent, as it is with most businesses, it is impossible to predict how many flight hours you will need. Furthermore, you do not want to invest in a jet card program, pay a large sum upfront, and then realize you do not need 25 hours of flight time.
While this may be true of some programs, you can now find jet cards starting at jet five hours. There are also jet cards where your hours never expire, as well as jet cards where your deposit is refundable if it turns out you will be flying less than you thought. Many jet cards also enable you to refill your account. Lastly, there are jet cards that have fixed rates and allow you to pay as you go. Having a jet card with fixed pricing and guaranteed availability can come in handy – ask those folks who evacuated from last year’s hurricanes.
- Taxi Time Rolls into Flight Time for Most Prepaid Jet Card Programs
Jet card programs will have fine print in the contract, and as a solid business professional, you most likely have read those contracts. However, what you may not realize are the additional fees that are added to your flight time. For example, there are flight hours stated in the contract. Your contract terms dictate the cost per flight hour, but there will also be dictated pricing for peak travel and holiday season trips. So, you do not have a fixed rate per flight or plane. Also, there is the issue of taxi time. A clear majority of jet card programs roll taxi time into the flight time, with as much as 15 minutes per trip both ways. Even if the correct taxi time is only five minutes, the contract may have a standard 10-minute taxi allotment. So, you’ll lose 20 minutes per flight regardless.
All contracts for private aviation have fine print, including on-demand charter. And the charter broker is right that many jet cards have peak-day surcharges – and they can range anywhere from 5-40%, although typically there are 10-20%. But you do still have a fixed rate. It’s just a higher rate.
In terms of taxi time, for the over 250 jet card programs we’ve analyzed, taxi time is in every fixed-price rate program separate and varies from 0 to 12 minutes per segments. However, many jet cards include as part of their fixed rate WiFi, catering, and various airport fees, things you will be charged extra for with on-demand charters. Most importantly jet cards with one-way fixed prices mean you won’t be responsible for ferry fees, something you will pay for when applicable with an on-demand charter. Another plus of jet cards is some include the cost of deicing, something that can cost up to $10,000 per incidence. And think about this – the aircraft you charter on-demand needs to be deiced before its repositioning flight to pick you up, then needs to be deiced before your flight. You could end up paying for deicing twice before your even fly.
- You Will Pay Additional Fees for Non-Preferred FBOs
Read your contract carefully, and you might see wording about non-preferred FBOs. If you do not use an airport operator that meets the needs of the jet card program, you pay additional fees for using fixed base operators outside of the contract relationship.
This is a bit of a red herring since with on-demand charter you will always pay FBO fees. While some jet cards allow you to choose your favorite FBO at no additional cost and others assess a surcharge, fixed price jet cards don’t charge for using their preferred FBO.
- Unused Hours Must be Used in a Specific Time or They Expire
You must purchase a pre-set number of hours, but then you must use those hours before they expire. Most cards will require that you use the time up within a certain timeframe. After all, the charter company does not want you to access lower flight rates years later when prices have fluctuated upward. Expiration dates will vary but read the contract carefully, and you might see that you have only a few months or possibly one year to use those flight hours.
While hours on some jet cards never expire, 18 to 24 months is typical. We do agree that you shouldn’t buy more hours than you need with the expectation that you are securing rates that can be used years from now. Some jet cards have Consumer Price Index escalators while have a rate lock, although that may only before one year, and after that you will be subject to published rate increases.
- Not Ideal for Here-and-There Flights
Your corporate aviation needs might be scattered, so if you fly inconsistently or less than 10 hours per year, a prepaid jet card program will be an unnecessary expense for your business. Also, when your business does not fly regularly, you can often negotiate better rates with a private jet charter marketplace for your here-and-there needs over a prepaid card program.
While there are jet cards starting at five hours, the typical jet card user is likely going to need 15 to 100 hours of private flight time per year. What’s not true is jet cards are necessarily more expensive than on-demand charter. In two head-to-head comparisons, we looked at, for the most part, jet cards actually had lower pricing for the trips we requested, however, we don’t dispute good brokers can find good deals.
Jet cards are more than just the lowest price. Since finding a really good broker – somebody who truly understands the inner workings of the industry – is easier said than done, we think jet cards provide some core benefits such as being able to know what you will pay ahead of time, knowing what the extra fees are and when they are applicable and also knowing the aircraft and pilots that will be flying you meet the minimum standards outlined in the program. Jet cards are also much more convenient than on-demand charter – full stop. Once you’ve done the homework to find a provider that fits your flying needs, it becomes just one call or even tapping your smartphone. On-demand charter means reaching out to several brokers to get competitive quotes then having to review each of the aircraft they are offering – a process that takes 45 minutes to two hours for each trip. What’s more most jet cards provide service recovery which means if there is a mechanical or a pilot gets sick, at your provider’s expense they will find a replacement. With on-demand charter, you may have to pay for a new charter while your broker chases a refund from the provider who let you down – and the replacement charter at the last minute is likely to be more expensive and to have repositioning ferry fees.
Are there times when an on-demand charter is likely to be less expensive than jet cards? If you are traveling from an airport with a high concentration of private jet activity to another like airport, it’s worth looking at what the prices for on-demand charter. Buying a jet card doesn’t compel you to use the card for every trip.
In talking to jet card users on a daily basis, I find many jet card users do in the first year they have a jet card check on-demand quotes, but then find that often there is little difference or they have a service letdown via on-demand charter, or they just tire of doing the work that on-demand charter entails. If you do decide to buy a jet card, our recommendation is to compare the details – which is what we can help you with – having compiled over 250 programs by more than 65 variables in easy-to-use spreadsheets.