An estimated $50 million in jet card deposits are at stake in JetSuite's shutdown

By Doug Gollan, April 20, 2020

Customers say there have been no communications since the private jet operator posted notice Thursday it had grounded its fleet

Private jet charter operator JetSuite and its sibling JSX look to be facing an uncertain future. The latter runs scheduled flights between private terminals using reconfigured regional aircraft.

Both had cut a high profile in the industry, attracting investments from JetBlue and Qatar Airways.

Late Thursday, JetSuite posted a notice on its website stating it had grounded its fleet and furloughed most employees. It said all flights would be canceled until further notice, and its call center was closed.

It blamed the move on the dramatic drop in demand due to the COVID-19 Coronavirus pandemic. An email address was provided, but so far, there have been no responses, according to several members.

JetSuite’s $50 million question

JSX continues to operate a skeleton schedule between a handful of western destinations. The JetSuite side is thought to have around 1,000 members in its SuiteKey jet card program.

SuiteKey customers joined by making non-refundable deposits of $100,000, $250,000 or $500,000. The operator debits their accounts after each trip. Rates range from $6,776 to $6,375 per hour with price locks of 12 to 18 months. Funds needed to be used within 24 months.

Various estimates peg the value of unused deposits at more than $50 million.

SuiteKey customers are a mix of Ultra High Net Worth (UHNW) individuals and corporate accounts. JSX operated more like an airline selling individual seats on a flight-by-flight basis with prices as low as $100. JetSuite offered full-aircraft charters.

A hub of innovation

The company was founded in 2008 by aviation veteran Alex Wilcox. His experience included a stint with Virgin Atlantic Airways before helping launch JetBlue.

In 2018 Qatar Airways announced “a minority stake in JetSuite, Inc. and indirectly JetSuiteX, Inc.” which was rebranded to JSX last year

At conferences, Wilcox was often lauded for his ability to adapt and tap into new opportunities. The company won numerous plaudits.

In January it received a perfect score in the Corporate Quality Index measuring LGBT workplace equality. In 2018, it appointed Stephanie Chung as the first African American woman as head of a major Bizav player.

Just last month, Fast Company named JetSuite and JSX to its Most Innovative Companies list. In 2018, its jet card program ranked second to Sentient Jet for satisfaction in Business Jet Traveler’s Annual Readers’ Choice Awards.

The original plan was to use Adam Aircraft A700s before that manufacturer ran into problems. It then pivoted to the Embraer Phenom 100, a competitor to Adam’s entry. Positioned as a no-frills air taxi service, it then added Cessna Citation CJ3 light jets, building a loyal following in the Western U.S along the way.

A focus on the Phenom 300

Over time, it switched out the CJ3s for Phenom 300s. As of last year, it said it was phasing out the Phenom 100s. The larger Embraer private jets have about twice the range as their smaller cousins. They also have more capacity, seating six to eight passengers compared to four.

The company attracted investment from JetBlue in 2016 and 2018, the second time along with Qatar Airways. A PitchBook representative said it raised $50 million from the Middle Eastern airline back then.

Zappos founder Tony Hsieh was an early investor, and as recently as last year was still represented on the board. JetBlue founder David Neeleman also served as a director for a long period, although he left several years ago.

In 2018, JetSuite announced it was the launch customer for now-defunct Zunum Aero’s hybrid-to-electric aircraft. eVTOLs are expected to disrupt short-distance flying in the future.

JSX attraction

JetBlue was apparently attracted in good part by JSX, originally branded JetSuiteX. The brainchild of Wilcox, JSX is using second-hand Embraer 135 and 145 regional jets it had reconfigured. The revamped planes had fewer seats, more legroom, adding free WiFi, drinks, and snacks.

Its focus was on short-haul routes of less than 500 miles. The big innovation was using private facilities at airports. The move cut door-to-door travel time in half. Eliminating TSA security lines enables travelers to show up 20 minutes prior to departure. Members of JetBlue’s frequent flier program can earn credits when they fly on JSX flights.

Qatar Airways seemed to have dual ambitions. Its April 2018 investment in the company came less than a year after American Airlines said no thank you. JetSuite was expected to operate at least some of the Gulfstream G500s its Qatar Executive subsidiary had on order. However, online reports suggest that changed last month.

Perhaps not related, on February 25th of this year, Qatar Airways announced it had struck a new commercial alliance with American Airlines. The deal restored code-sharing between the two Oneworld partners.

The Doha-based airline, which has stakes in British Airways’ parent IAG, and Cathay Pacific Airways, also stepped back from funding Air Italy in February. It blamed other investors. Air Italy consequently shutdown.

Neither Qatar Airways or JetBlue responded to requests about the status of their investments in JetSuite or JSX. Mentions of the pair no longer appear on either’s website.

CARES Act relief for Part 135 operators

A report by WingX estimates private jet flights in the U.S. were down nearly 80% during the first two weeks of April. However, help might have been on the way as part of the bipartisan COVID-19 government relief programs.

It is not known if JetSuite had received notification one way or the other about support for Part 135 operators. The CARES Act loans can be forgiven if employers use the money to retain employees. The goal is to be able to quickly restart business in the coming months by keeping teams intact.

The decision to leave its customers wondering what’s going to happen to their money baffled numerous people in the industry.

While flight tracking indicates JetSuite had reduced its active fleet like other operators, leaving its high-net-worth customers with no information about their money still surprised many.

Several speculated JetSuite could have continued to service the limited demand by arranging flights on other operators. A semi-hibernation approach could have enabled it to wait for a hoped-for surge in demand for private jets once stay-at-home restrictions ease.

Missing the Rebound?

One major private jet operator tells Private Jet Card Comparisons they are now getting queries from corporate customers. Those accounts are planning to expand private aviation access to a broader range of employees.

Light at the end of the tunnel theorists believe affluent consumers who can afford but previously eschewed private flying will now dig deeper into their wallets to minimize exposure to COVID-19 Coronavirus, at least until there’s a cure.

Prior to the current crisis, JSX had been expanding rapidly. At year’s end, both JSX and JetSuite had approximately 30 aircraft. Executives said lofty plans called for a fleet of 100 by 2023.

In the past year, JSX added Seattle and Phoenix and was scheduled to start Reno and Portland, Oregon.

Earlier this year, after encountering issues related to acquiring more Phenom 300s, JetSuite officials decided to refocus on the Southwestern and Western U.S., where most SuiteKey customers are based. The 16th largest charter operator in the U.S., JetSuite has long had one of the highest utilization rates.

SuiteKey members who spoke to Private Jet Card Comparisons said they have been unable to get a response via the email address provided on the website. One customer said his attempts to contact Wilcox via email and phone had been unsuccessful.

The company you don’t want to keep

Should JetSuite customers lose their deposits in the end, it will once again highlight there are no requirements to escrow the flight funds, although many providers offer the option.

If JetSuite customers lose their deposits, it won’t be the first time consumers lost significant money in a private jet provider failure. Avantair, BlackJet, DayJet, ImagineAir, JetCardPlus, Wijet, and ZettaJet each left a trail of customers and vendors with losses. Last year JetSmarter settled a class action arbitration after fending off numerous lawsuits. It was eventually purchased by Vista Global Holdings, which merged it with XOJET to form XO.

An outside spokesperson for JetSuite declined to provide additional information related to the SuiteKey deposits. Attempts to reach Wilcox directly were unsuccessful.

Other Phenom 300 operators with jet card programs, including Airshare, Flexjet, GrandView Aviation, NetJets, and Nicholas Air, stand to benefit. Charter brokers Magellan Jets and OneFlight International each offer Phenom 300 jet card programs.

In fact, Denver-based OneFlight already launched a special promotion. It’s offering discounts for SuiteKey members, based on the amount of money they had on deposit with JetSuite.

As recently as the end of March, JetSuite was helping with repatriation flights alongside JSX. In the meantime, customers and furloughed employees are wondering what’s next.

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