Lawsuits, closures, bankruptcies and lack of transparency show the challenges consumers face
In the two years since I launched Private Jet Card Comparisons, I’ve been surprised by the number of bankruptcies, closures, lawsuits, and lack of transparency in private aviation. In Europe, Wijet liquidated its UK subsidiary while Surf Air closed its entire operation there. Zetta Jet filed for Chapter 11 and then Chapter 7, leaving bills estimated at between $50 million and $100 million. ImagineAir just closed shop without notice. Both JetSmarter and Ascension Air find themselves facing unhappy customers, including lawsuits. Of course, there have been other failures before, including Avantair and Blackjet to name just two fairly recent ones.
How not to lose on your private jet membership
To help you avoid the same pitfalls, here are some tips I put together. While they may not be foolproof, I think they are helpful to keep in mind:
Don’t assume what you read in the media tells the entire story
Companies are not always transparent about what they are selling. Reporters covering announcements about new routes, apps, and funding, don’t necessarily cover private aviation on a regular basis.
For example, Blackbird is an easy-to-use app platform that compares itself to Uber. It says it offers private flights cheaper than driving. Recently it made news when it raised $10 million. What’s not mentioned is it is actually selling dry leases. The agreement gives the buyer operational control of the flight.
That means you are legally responsible for ensuring pilot qualifications, aircraft maintenance records, and insurance are all current. It’s all detailed in over 10,000 words of agreements you are signing when you click the buy button. It’s not mentioned in any of the articles about it.
Compare media reports to see if the company follows up on its announcements
Executives of Atlanta-based air taxi service ImagineAir had announced plans to double its fleet in both 2015 and 2017. It shut down without warning in May 2018. The talked about expansion never happened.
Don’t rely on marketing brochures, VIP parties, and glossy advertising
Zetta Jet touted its fleet of brand new Bombardier Global Express long-range aircraft and white glove service. It took out advertising in major media promoting charters and jet cards costing in the hundreds of thousands of dollars. It hosted parties with celebrities. Its Chapter 11 filing in September 2017 had a 58-page list of creditors owed cumulatively over $50 million.
Research the company you are buying from.
Get to know the company Find out how long they’ve been around? How many employees they have? Are they part of a larger organization? Who’s the CEO? Ask to speak to the CFO. For under $100 you can run a credit report on the company as well as top executives. The information may not be conclusive, but now you can ask the company about your findings.
Check out review sites
While in private aviation, the numbers of reviews tend to be limited, it’s worth looking anyway. JetSmarter and Ascension Air are each facing lawsuits from disgruntled members claiming fraud. By checking their reviews one would have seen them moving from positive to negative.
Limit your financial risk
Can you ascertain the viability of the company for the period of your membership? If not, ask about an escrow account, refund policy, or negotiate splitting up your payments to decrease risk.
Don’t sign before you have your lawyer review the contract
If it is a complicated contract, consider getting an attorney who specializes in aviation law. BlackBird is a good example that no contract is too small to show to your lawyer. While you may only be paying hundreds of dollars for your flight, clicking the buy button might mean millions of dollars in liability.
You can also ask to talk to current customers. Better yet, ask to talk to customers who left in the past year. Members often don’t renew for a variety of reasons, but still, believe the company provides a good service.
Once you are in a program, it makes sense to keep your sensors on alert. In a number of cases, members I spoke to tell of having seen a decline in performance, in some cases high staff turnover, in others, planes being late or canceled at the last minute.
Private Jet Card Comparisons doesn’t vet financials of the over 50 companies in our database. However, we do enable subscribers to save research time by finding ones that best fit their needs comparing over 65 variables, which is probably the best place to start.