Both the Coronavirus pandemic and the CARES Act waiving the 7.5% Federal Excise Tax are impacting jet membership costs and terms
(Updated Nov. 20, 2020) To say the past month and a half has been a roller coaster for private aviation would be an understatement.
March started with high hopes. A spike in requests from first-timers who wanted to get to second homes or relocate family members kept activity close to normal.
The second half of the month was a different story. With hotels, resorts, and restaurants closing, there weren’t many places for UHNWs to fly, even if they wanted.
The CARES Act dded another wrinkle. It eliminated the 7.5% Federal Excise Tax tacked on to on-demand charter and jet card flights in the U.S. and select destinations in Mexico and Canada.
While private jet travel in the U.S. may be down as much as 70% this month, there now appears to be a silver lining.
People who can afford to travel privately but hadn’t been able to justify the extra expenses now can. Without a vaccine or cure for COVID-19, staying away from airport terminals and crowded and dirty airliners has become paramount.
COVID-19 Coronavirus Jet Card Program Changes
To help track the many changes, below is a summary of updates to fixed-rate, guaranteed availability jet card programs.
Airshare jet cards don’t require the full down payment for all flight hours. For an Airshare EMBARK jet card, you pay a program fee ($51,000 for a Phenom 100 or $99,000 for a Phenom 300) that provides you access to hourly rates as low as $1,625 per hour.
The fractional fleet operator has removed FET from both the program price and hourly rates. If you purchased your jet card before FET was removed, you can still fly your hours without the additional 7.5% tax added on. Tax on the membership, however, was already paid to the government.
Airshare is also offering 5-day jet cards in addition to the normal 10-day increments.
Air Partner has reduced hourly rates for existing customers by 7.5% from its inclusive pricing, and the same going forward for new customers. It has also bumped up the lead time for reservations from 12 hours to 48 hours until further notice.
Broker Airstream Jets is crediting the client’s FET back on to their jet card balance. For example, if a client has $40,000 in credit on their Distance Card prior to the CARES Act, they now have $43,000.
For new purchases made before Dec. 31, flights in 2021 are tax free for the life of the card or deposit.
Alliance Aviation is passing along the FET savings to new and old customers. It is also repricing its rate card with varying increases to account for possible higher costs due to its 8-hours lead time for reservations.
For new purchases made before Dec. 31, flights in 2021 are tax free for the life of the card or deposit.
Clay Lacy Aviation says when a client makes a deposit, it does not charge FET. When a client conducts a charter flight, they deduct the funds from their deposit and add the FET at that time. That means, in line with the recent tax holiday, it is not charging FET through the end of 2020. It has also lowered all of its hourly rates due to the drop in fuel prices and demand.
Concord Private Jet
Broker Concord Private Jet is deducting the 7.5% FET tax for current customers until the end of 2020 on any hours they use. During April, it is also offering the 25 hours on a midsize jet for new clients at $135,000, or $5,400 per hour. The rate is locked for 12 months. A 10% deposit is due at signing with the balance payable prior to your first flight.
Concord offers an escrow option on funds, and its cards are fully refundable. Hours are rate locked until 2022. And any funds deposited by Dec. 31 are FET-free until the hours purchased are used.
Delta Private Jets
Part of the Wheels Up group of which Delta Air Lines is now the largest shareholder, Delta Private Jets customers will see the FET knocked out of their inclusive rates. The private jet management company hasn’t announced changes to pricing for new members.
Dominion Air Charter
Dominion Air Charter, another broker, which combines private jet charters with ground transportation, is eliminating FET from its inclusive hourly rates for current customers.
It’s increasing previous hourly rates by 7.5% for new customers, which an executive described as “helpful for the business in these challenging times.”
Dumont Aviation Group
Dumont Aviation Group is enabling customers of its Santos jet card to eschew the 7.5% FET if they buy before the end of the year.
Customers of Exec1 Aviation who buy a jet card this year will fly at the same rate next year. In other words, if it deems FET needs to be paid, it will pay it, and you, the customer will not see an increase in your contracted rate.
Florida-based ExpertJet, a brokerage run by several former private jet pilots, is reducing FET inclusive rates by 7.5% for new customers and offering non-FET rates during the tax holiday. Current customers also will be charged contracted rates, less FET.
If you already are a Flexjet jet card customer, good news. The pricing of a jet card sold previous to this CARES Act FET tax suspension included the tax estimate. However, the fractional fleet operator does not remit the tax to the IRS until after the eligible flight takes place. That means flights through the end of the year are tax-free.
For its 25-hour Phenom 300 jet cards purchased after the tax suspension, the all-in hourly rate is $6,750, including fuel, and does not include the FET tax. Flexjet also sells cards on its Challenger 350 fleet.
If hours on jet cards sold after April 1 are redeemed after the FET tax is reinstated, the customer will pay a higher hourly rate to reflect the tax reinstatement. Flexjet now says if you buy before the end of the year, you will fly FET free for the life of the card.
Both its Fly Club and Exclusive Club require a non-refundable deposit of $150,000. However, Exclusive Club offers lower rates with an annual payment of $20,000. For Exclusive tier members, they can deposit as much as they want by Dec. 31, 2020. So long as they pay the annual fee, their funds will remain active and their flights will be sans the 7.5% tax. For Fly Club members, they will have the standard 24 months from the date of purchase to use their funds on a FET-free basis.
Aviation + allows members to fly tax-free until you use your finds. The minimum deposit is $100,000. Deposits in Aviator + are not eligible to be held in FXAIR’s escrow account program.
Jet Aviation, a unit of General Dynamics, has always charged FET to its jet card members post-trip. That means the FET holiday is allowing current and potential customers a 7.5% savings on their trips through the end of the year.
The management company is allowing customers to buy 25 hours, but only deposit half of the normal amount upfront. Based on customer needs, it is adding specified international destinations as well. So far, there have been no changes to its pricing, which includes an hourly rate, plus fuel surcharges which vary by aircraft size category.
Jet Linx Aviation
The fifth-largest private jet charter operator in the U.S., Jet Linx Aviation has introduced a short-term three-month membership as a Coronavirus response. Pricing remains the same and fuel surcharge will likely decrease, the company says. Both old and new members save the FET through the end of the year. Members who use either the Jet Linx corporate or individual jet card deposit programs will fly tax-free throughout 2021 or until those funds expire.
The only change to its program it is now offering 12.5-hour jet cards instead of 25 hours.
Jets.com has lowered pricing for both current and new customers. They reflect the suspension of FET for the remainder of the year. For every flight flown with current customers, they will receive a 7.5% credit in hours added to their account. For new customers, the broker has lowered pricing by 7.5% and has added 10-hour jet cards. Any flights flown on these cards after Jan. 1, 2021 will be tax-free until funds are used.
Jet The World
Broker Jet The World is passing along the FET savings to current jet card customers. It is repricing its fixed-rate, guaranteed availability cards for new customers to account for extra work and possible limited availability going forward.
Luxury Aircraft Solutions
Broker Luxury Aircraft Solutions is not charging the FET for existing jet card customers. It has also scrapped its existing program and has rolled out a new pay-as-you-go fixed rate jet card with a $299 per month fee. The new program reduces the service area to the Continental U.S.
The jet card broker has eliminated FET from its inclusive rates for both old and new customers. Magellan Jets is also now offering an escrow account option for new customers. It is also offering tax-free flights until funds expire for any jet cards bought before the end of the year.
NetJets restructured its jet cards. Marquis Jet branded cards now offer inclusive pricing, so no more fuel surcharge. Pricing for Elite cards, which had included fuel and FET, were reduced to reflect both the tax holiday and the lower cost of jet fuel.
Because NetJets uses purchase date to reflect taxes due, if you buy 25 or 50 hours now, flights in 2021 when FET is expected to be restored, will still be tax-free. Pricing for its Phenom 300 jet card was dropped 11% to $168,000 for 25 hours. It has also launched 100-hour cards, like others, valid for 24 months.
On the other hand, if you currently have hours left on your current card, any flights between now and the end of the year will be charged with the 7.5% tax. That’s because NetJets paid the tax when you purchased the card.
Nicholas Air is offering FET-free flights for the life of your deposit for any card bough before the end of the year, effectively saving the 7.5%
The Denver-based charter broker offers jet cards with fixed hourly rates across more than 50 aircraft types. Both current and new customers save FET. It also is offering a limited number of $50,000 10-hour light jet cards.
Priester Aviation is eliminating FET on all future Centerline jet card contract, which will result in a reduced hourly jet card rate by 7.5%.
All existing Centerline jet card clients will receive an increase in the available hours they can use based on the equivalent amount of FET paid into the program.
The private jet management company is also offering a 10-hour jet card as its new entry-level program.
Miami-based jet card broker Prive Jets has moved from hours to dollars for its jet card deposit programs. It also reduced the starting point to $50,000. For light and midsize private jets, daily minimum moves to
Directional Aviation’s Sentient Jet is charging old and new customers the existing hourly rate with FET removed (just hourly rate). The is not charge FET which will be crossed out on either a card purchase or an invoice. Deposits by new members are also reduced by 7.5%. The inventor of the jet card also has eliminated its pre-2000 light jet program. It has also extended tax free-flying for the life of funds on cards purchased this year.
Both existing and new jet card members for the Solairus Aviation program will save the 7.5% FET. It also reduced super-midsize rates. Its 60-minute minimums for super-midsize and large-cabin jets make the management company a fit for to fly 8 to 10 people short distances.
Broker Velocity Jets is passing along the FET savings to new and existing clients. It hasn’t changed its current rate card for jet cards but is continuing to review pricing as the situation unfolds.
As operators park aircraft due to low demand, brokers are concerned it will be more expensive to source jets on short-notice, turning more fixed-rate flights into financial losers.
Luxury private jet operator VistaJet normally requires a three-year commitment for its fixed-rate Program membership. It’s offering short-term month to month leases.
Its Vista Dynamic Lease starts at $445,000 for 50 hours on a Challenger 350. Included is basing the aircraft and crew at an airport near to you. The fixed-rate service area is worldwide. Options include the Challenger 605, Challenger 850, and Global 6000.
Wheels Up is offering a bit of a twist compared to other offers so far. Members have three choices. Members can opt-in to the tax-free Air Transportation Only (ATO) Fund with restrictions designed to make it compliant with how the IRS may interpret tax law. They can continue to deposit funds into the existing program with unchanged rules. Or, they can have two separate funds.
For all-inclusive hourly rates, XO is reducing the price by 7.5% by taking out FET, for current and new customers. The unit of Vista Global Holdings is also continuing its 3.5-hour rate cap for its Citation X and Challenger 300 fleet.