Lawsuits, layoffs, safety concerns, and now lack of flights cloud JetSmarter’s future

An in-depth look beyond JetSmarter’s legal woes, layoffs and last week’s safety incident to its actual flight schedules and how much you will end up paying for both single seats and to start shared flights

 

 

With a new lawsuit seeking at least $890,000 filed against JetSmarter last week in New Jersey and perhaps a dozen more customers contemplating legal action, Private Jet Card Comparisons has been told by multiple sources that as many as 40 people were laid off from the company over the past several weeks. In March 2017, its CEO Sergey Petrossov told the Miami Herald it had 260 employees. 

 

It gets worse. For its current core offering, which is the ability for members and now the general public to buy single seats on scheduled private jet flights for specific routes, in a number of cases there were very few or no shared flights scheduled through the end of October when I checked today and yesterday. In other words, the only way a member who may have paid thousands of dollars to join could buy a seat would be to start their own shuttle. The cost to start a shared charter flight by buying a specified minimum number of seats – typically two to four seats – was in several cases more than chartering an entire aircraft through a different broker, according to my analysis.

 

What’s more, last week’s incident where a shared flight from Las Vegas to New York was diverted to Nebraska after a passenger threatened the crew and other passengers has caused others in the industry to speak out. The PR company that represents a seller of jets cards and full charters, but doesn’t offer seat sharing flights, sent out an email stating, “Magellan Jets prides itself on their safety standards and being purely private. Their customers appreciate a truly personalized and private experience with every interaction, both in the air and on the ground. They are available for comment on why companies like JetSmarter, who sell seats on jets, are not the best way to travel. As evident in this incident, not only do you not know who you’re going to be sitting next to; but their safety standards are clearly not up to industry standards.”

 

JetSmarter Changes Its Business Plan

 

All of the above comes after JetSmarter’s slow and painful 180 degrees June pivot to where it now charges for all flights, much like buying an airline ticket. By allowing non-members to book seats it has irked existing members who had been sold five figure contracts, some just weeks before the switch. Members who signed up under former schemes offering free seats and have seen their benefits reduced say while they were promised they could continue to book gratis seats on flights under three hours, it is increasingly difficult to find availability. Several who have contacted me are now considering legal action they say.

 

The new lawsuit filed in the Superior Court of New Jersey, like two others from August, includes text messages from a JetSmarter employee inferring that free seats, including on flights between New York and Los Angeles, would continue as an inducement to renew. The plaintiff Shelley Davimos says JetSmarter implemented charges on flights over three hours after she renewed. She had joined paying $9,000 per year and alleges she was promised her deal would be grandfathered, and while the price has stayed the same, benefits have been stripped away as is the case with other members. JetSmarter’s position according to members I’ve talked to is they are contractually entitled to make these changes.

 

The new lawsuit alleges, “Months after her renewal Defendants notified Plaintiff that despite the promises made and her payment for the program, they were making unilateral changes imposing substantial fees on every leg traveled.” The complaint says, “The additional fees were so significant than Plaintiff was unable to utilize the services and she had to pay for commercial airline tickets or arrange private charters at her expense.” The lawsuit further states, “When Plaintiff sought to renew the program with JetSmarter, she was told that there would be no changes and that her price would be locked in.”

 

Last week JetSmarter filed a motion to compel arbitration in a separate California action seeking at least $2 million in damages. In that case, the plaintiff says social media posts from the likes of Kim Kardashian and other celebrity influencers failed to disclose that the endorsers had material relationships with the company while touting its benefits breaking both FTC rules and deceptive advertising laws. The lawyer, in that case, Darin Beffa says he will file a motion to keep the case moving forward. Another attorney said if the memberships were being sold using illegal tactics the arbitration clause may not be enforceable.

 

The biggest storm clouds ahead maybe if the service is even viable at this point. JetSmarter sells its memberships targeting people who want to fly privately but only need to buy a single seat and are willing to fly on somebody else’s schedule or people who want to set their own schedule and save money by buying several seats to start a shared flight allowing JetSmarter to sell the additional seats. To grease the market, JetSmarter launches various PR campaigns promoting that there will be flights on specific routes.

 

As an example, in May 2018, one month before announcing its new paid flights only business model, the company issued a press release via PR Newswire stating, “JetSmarter, the world’s largest private aviation community, today announces the expansion of its shared flight services in Dallas, by adding new routes to Austin and Houston.  These routes accompany the current schedule, which offers flights from Dallas to Los Angeles and New York. The launch of these routes is a result of the increased demand from travelers looking for convenient flight options between these major cities. The expanded service will begin on May 14.”

 

The release even offered up a schedule showing shared private flights from Dallas to Austin scheduled Mondays at 7:30 AM and Fridays at 4:00 PM; Austin to Dallas on Mondays at 9:00 AM and Fridays at 5:30 AM; Dallas to Houston on Tuesdays and Thursdays at 8:00 AM and Houston to Dallas Tuesdays and Thursdays at 5:00 PM.

 

It’s not clear if the flights it promoted back then in an effort to sell memberships are still being offered. Looking at availability on JetSmarter’s website it shows only two flights – underlined in red on September 20th and 25th – where a member – or now non-member – can purchase a single seat between Houston and Dallas. The other higher prices are the cost per seat to start a shared shuttle. For example, clicking through (see screenshots below) on Monday, September 24 would require the user to buy three seats $1,368, or in other words, pay $4,105 for the 45-minute trip.

Houston to Dallas JetSmarter Flight Schedule

Reversing the trip, there are only two dates showing through the end of November (September 20 and 25) offering the ability to buy single seats on flights even though JetSmarter just four months ago was encouraging Dallasites to pony up $4,950 for an annual membership plus a $3,000 initiation fee touting twice weekly flights in each direction for free.

 

Dallas to Houston JetSmarter Flight Schedule

A June 12, 2018 press release issued by the JetSmarter announcing the switch to all paid flights and it was allowing non-members to book seats and start shared flights stated, “As flight availability is directly tied to the number of people crowdsourcing flights, pay-as-you-go access (non-members) will grow flight options exponentially by enabling anyone using the JetSmarter app with the ability to initiate an entire flight, pay only for the seats they need and share the rest of the aircraft with the community – saving thousands compared to traditional private travel.”

 

From Dallas to Austin (screenshots below) and return there were only single weekly flights in September – not the promised twice-weekly schedule – and for October there is nothing – not even the ability to create shuttles, which offers an even larger question. What the heck is going on?

 

Dallas to Austin JetSmarter Flight Schedule

JetSmarter Austin to Dallas Flight Schedule

Schedules from Dallas to New York, promoted to the Dallas media as an existing route, show through the end of November no dates where it’s possible to book a single seat. The rates below all refer to the price for starting your own shared shuttle, requiring you to buy multiple seats at $6,320!

Dallas to New York JetSmarter Flight Schedule

 

Clicking through on October 1, 2018, the create your own shared flight option requires a person to buy four seats at $6,320 per seat (screenshot below). The starter’s cost to buy the four seats would be $25,280, with JetSmarter then trying to sell the rest.

 

 

What’s more, the pricing is non-refundable (screenshot below).

 

 

At the same time, online broker Stratajet quoted me $20,796 for the same date for a fully private seven-seat private jet, $4,484 less than four seats and sharing with strangers via JetSmarter.

 

 

What’s more, unlike JetSmarter where I would have been locked in, I would have been able to cancel the Stratajet charter up to seven days before departure with no penalty and up to 24 hours in advance with just a 50% charge (screenshot below).

 

 

Again, going from New York to Dallas through the end of September there isn’t any date where JetSmarter is offering a flight to buy on a single seat basis. It gets one thinking if members who joined with the expectation of getting free seats are saying there are very few to be had, and the new pitch is you can buy single seats for fares similar to commercial airline flights, but you can’t, what exactly do you get after paying thousands of dollars?

 

 

It’s not clear the dates I looked at are outliers. Checking flights from New York to Dallas on October 10^th, JetSmarter wants me to buy four seats $25,280 while Stratajet will sell me an entire six-seat private jet charter that I would not have to share for $17,529, over $7,500 less than JetSmarter.

 

 

Through Stratajet I could have canceled up to 24 hours before departure with no penalty (screenshot below) unlike the non-refundable proposition for JetSmarter. Perhaps pricing is one reason why there seems to be a dearth of customer initiated shuttle flights?

 

 

In January 2017 the JetSmarter PR machine was doing similar work promoting new “routes” from South Florida in an effort to drum up memberships. At that time, it was still offering free seats on flights under three hours and like in Dallas was able to catch the attention of key media outlets.

 

A January 10^th report in the Miami Herald was titled “JetSmarter expands private-jet shuttle routes in Florida.” According to the newspaper, the schedule at the time included an Orlando-Fort Lauderdale route on Mondays and Fridays; Tampa-Fort Lauderdale on Sundays and Thursdays; and Fort Lauderdale-Bahamas on Fridays and Sundays. These were presented as additions to routes from South Florida to Chicago, Colorado, San Francisco, Los Angeles, Las Vegas, and Atlanta.

 

Looking at JetSmarter’s website today there’s not a single date with any flights where somebody can buy a single seat between Orlando and South Florida through the end of October, even though there were supposed to be at least twice weekly flights before other members started more flights. The only pricing available for the period was if I wanted to start a shared flight, something that would have required an outlay of at least $4,500.

 

Orlando to South Florida JetSmarter Flight Schedule

South Florida to Orlando JetSmarter Flight Schedule

 

A member who joined earlier this year told me she bought her membership after being promised a schedule of shared flights between South Florida and Tampa. Looking at the JetSmarter website it was much the same with only a single date in each direction through the end of October where one can buy a single seat.  All the other dates require a non-refundable outlay to buy multiple seats to start a shared charter flight.

 

Tampa to South Florida JetSmarter Schedule

 

Other routes JetSmarter was touting to The Herald back in January 2017 seem lacking. There were no flights between South Florida and Colorado through the end of October that offered a single seat option and only a single flight in the opposite direction.

South Florida to Aspen JetSmarter Schedule

Aspen to South Florida JetSmarter Schedule

 

The September 19^th  JetSmarter flight from Aspen to Ft. Lauderdale was $5,990 per seat, about seven times higher than the $729 American Airlines wanted for a first class flight on the same date (screenshots below).

 

 

Between South Florida and Las Vegas between now and the end of October, there were just two flights posted offering the opportunity to buy a single seat (screenshots below) when I looked.

 

South Florida to Las Vegas JetSmarter Schedule

Las Vegas to South Florida JetSmarter Schedule

Could it be that there are plenty of flights, they just happen to be sold out? That doesn’t seem to be the case. I could only find two flights listed as sold out – on September 13 and 14, one member initiated. Right now, JetSmarter is still pitching memberships that would run $7,950 and $12,950 in the first year. They also launched an Elite Membership over the summer priced at $25,000, but I didn’t write about it since they didn’t respond when I asked some questions about the details.

 

JetSmarter Membership Pricing

 

I also looked at flights between South Florida and Los Angeles, touted as one of its high-frequency routes. To Los Angeles, through the end of October, some seven weeks, there were five flights where one could book a single seat with member prices ranging from $3,490 to $3,805 one-way.

 

South Florida to Los Angeles JetSmarter Schedule

Looking at September 16^th, a JetSmarter private jet seat is priced at $3,865 compared to first class nonstop on American Airlines for $1,215 (screenshots below).

 

What is JetSmarter saying right now?

 

In June 2017, its press releases crowed, “Members can reserve seats on more than 50 routes across three continents.” In May 2018, when it launched its new routes from Dallas, the release stated, “Currently, JetSmarter’s shared private flights are available across the United States in cities including New York, Miami, Fort Lauderdale, West Palm Beach, Los Angeles, Chicago, Las Vegas, San Francisco, Atlanta, Scottsdale, and Dallas.  Flights are also available throughout Europe and the Middle East.”

 

In an August 20, 2018 release, the company said, “JetSmarter connects fliers to more than 300 weekly shared flights.” It said, its “seat bookings have already grown by 116% year over year and shared flight frequency has also increased more than 20%.” In a September 6 press release weeks ago, it said its shared flights are “challenging the commercial aviation industry through competitive pricing.”

 

The current wording on its website today (screenshot below) is less specific than its press releases have been. Right now the promotional copy states, “Create flights to and from 170+ countries worldwide, or fly on high-frequency routes between major cities. For example, between New York, L.A., and South Florida alone, JetSmarter connects fliers to more than 100 flights every week.”

 

 

In looking at the one-week period Sept. 23 to 29, 2018, I found only 21 flights where I could buy on a confirmed basis a single seat on flights between Los Angeles, South Florida and New York. The South Florida – New York route accounted for 15 of those flights. All flights from and to South Florida, New York, and Los Angeles showed a total of 39 scheduled flights, excluding flights from Los Angeles to and from San Francisco and Las Vegas where JetSmarter is reselling seats on JetSuiteX flights you can buy directly. There were also a handful of flights that were open for crowdsourcing, meaning that you can book a seat, but unless enough other folks jumped in, the flight would be canceled. Only one flight during the week shows as being sold out.

 

New York – Los Angeles – South Florida Market Shared Flights September 23-29, 2018

 

The average one-way price for flights between New York and South Florida during the period was $1,695. Looking at Google flights I was able to find nonstop first class flights starting from $269 to $346 each way. Flights between New York and Los Angeles averaged $4,040 per seat for members of JetSmarter while American Airlines is selling flatbed first class seats for $2,179. Los Angeles – South Florida flights are running $3,243 per seat on JetSmarter compared to nonstop first class on American Airlines from $1,215. Overall, for the 38 flights I tracked where JetSmarter was selling seats, the average fare per seat was $1,882, sticker shock for members who used to fly free and quite a bit more than first class fares that were available for purchase.

 

Even on routes where JetSmarter offered lower prices such as Boston-New York where its fares averaged $490, it was above the $175 to $226 starting prices for first class on commercial airlines that offer dozens of flights per day instead of one per week.