JetSmarter is hoping to put its troubles behind it. Earlier this month, without admitting guilt, it agreed to settle a class action arbitration for $6 million. It also agreed to be acquired by Dubai-based Vista Global, parent of VistaJet and XOJET. However, a CNBC report yesterday says JetSmarter may be under investigation.
CNBC reported two members of the sharing economy charter broker were interviewed by law enforcement last month. The article said investigators from the FBI and Southern District of Florida’s U.S. Attorney’s office asked about sales practices, contracts, salespeople and “the types of passengers who flew on JetSmarter flights.” Investigators told the customers it was part of an “active investigation.”
A CNBC report in January included an interview with a former member who said the service was used by drug dealers to transport cash and drugs.
Both JetSmarter and Vista Global denied JetSmarter was under investigation, according to CNBC. It quoted Vista Global as saying the company “carried out an extensive due diligence process and we continue to see JetSmarter as a highly attractive acquisition for the group.”
Various lawsuits accuse JetSmarter of taking part in a “bait and switch” and have called it a “scam.”
On March 26, 2018, JetSmarter announced new members would have to pay for seats. Company sales executives told existing members if they upgraded to or renewed Sophisticated memberships, its most expensive tier, they would continue to have free seats as a benefit.
Lawsuits by various members and posts on social media say that it was in the second half of June 2018 they began to notice a reduction in free seats.
Leonardo Galvez stated in his sworn filing he upgraded to a $97,500 Sophisticated membership on June 1, 2018, based on the promise of free seats.
In his lawsuit, Marcello Porcelli said on June 11, 2018, his sales rep “pressured” him to buy a three-year Sophisticated membership.
On June 21, 2018, Galvez messaged his sales rep to say, “I’ve noticed that they cut down the coast to coast shuttles (with free seats for Sophisticated members) to once a week. Is that something that will remain that way? I just upgraded to Sophisticated and this affects me tremendously.”
His rep acknowledged, “I think they did make that adjustment. We are not sure of the details here in the sales department.” In the filing Galvez said instead of getting free seats, he would now have to pay “75% of the price of the flights,” something he couldn’t afford.
Members of the travel chat board Flyertalk on June 22, 2018, complained about limits on the availability of free seats even while there appeared to be plenty of seats for sale.
“On shuttles there are a select few seats that you can utilize tokens with. On heavy jets it seems like the first 3 seats, on the smaller turboprops maybe 1 or 2. For example, there are 7 seats available from Chicago to NYC this Sunday. A Sophisticated or Smart member can’t use tokens to book, but you can pay $700,” wrote a poster named Townshend (below).
Two attorneys who spoke with Private Jet Card Comparisons said that if JetSmarter executives directed employees to sell memberships promising free seats after they had made a decision to significantly reduce those seats, that could provide evidence of criminal intent.
So far, it’s unclear when JetSmarter executives made the decision to cut back free seats. It’s also unknown if they believed they were providing enough free seats to accommodate the memberships they were selling that included that benefit.
Vista Group has said it hopes to close its acquisition in during the second quarter. JetSmarter technology which allows users to book charter flights via an easy-to-use app could help Vista Group drive more bookings onto its fleet of about 115 super midsize, large cabin and ultra-long-haul private jets.