In a filing last week, the grounded private jet charter operator outlined what its jet card customers might receive in exchange for their $50 million in unused flight credits
What’s nearly $50 million in unused flight credits worth when your jet card provider goes bust?
The answer looks to be less than customers had hoped for, but more than past bankruptcies and closures.
As exclusively reported by Private Jet Card Comparisons, JetSuite, whose official name is Superior Air Charter, LLC, is proposing two options.
JSX is also quite far from the product that my deposit was intended to be used for. It’s like purchasing a car and instead of getting the car getting bus tickets.– JetSuite SuiteKey jet card customer
For those who want cash, the filing suggests they won’t see much. It estimated the payout will be a range from 2.3% to 15% of their outstanding balances.
Filings show the largest customer with unused funds is Netflix at $931,098. There are at least eight more jet card members with balances over $300,000. In total, over 900 SuiteKey customers had unused balanced when JetSuite grounded its fleet without warning on April 15, 2020.
Under the cash option, Netflix might see as little as $21,000.
The other offer is 15% in flight credits to be used with JSX, an affiliated company not involved in the bankruptcy. It operates scheduled routes in the West using regional jets in a corporate shuttle configuration. Customers buy seats like airlines. However, by using private terminals, JSX cuts door-to-door travel times in half.
JetSuite customers unhappy with bankruptcy offer
SuiteKey customers contacted we contacted were not excited, with several complaints about a relatively short window to use credits and the fact that 80% of credits can only be used for discounts off ticket prices, not fully free tickets. There are other restrictions, too.
One SuiteKey customer who asked that his name not be used said, “The offer seems like kind of a joke. First, I’m in the Northeast, and I don’t think they even have JSX flights in the Northeast. JSX is also quite far from the product that my deposit was intended to be used for. It’s like purchasing a car and instead of getting the car getting bus tickets.”
JSX credits “a joke”
Another jet card customer echoed those sentiments. He said, “I thought the JSX thing was a joke. Such a small amount, so many restrictions, never mind that I’m on the East Coast, and why would anyone become an unsecured creditor again with them. I’ll see if any enterprising lawyers try to get some of us together and start some type of class action. If they don’t, I’ll take the second option and see if I get anything back.”
Florida-based Frank Genovese wasn’t impressed either. He told us, “Zero benefit to East Coast owners. Even if West Coast users agree to buy the East Coast credits, the East Coast owners have no control over pricing. JSX needs to cut a deal with some East Coast brokers to have this offer transferred to them for our benefit.”
One West Coast SuiteKey customer who had about $100,000 on account when JetSuite ceased operations was critical of the deal structure. “So I would get about $3,000 in flight credits, which is probably about 15 flights, and they only give me six months to use it, with all sorts of restrictions. Then based on the discount percentage for the rest, I would probably get close to 100 tickets they would make me use within 24 months.
“The fact is, the way they have structured it with restrictions, they are giving us seats they weren’t going to sell. They certainly could have been more generous,” he continued.
Private Jet bankruptcies
In past private jet closures, customers got even less. Zetta Jet went from Chapter 11 into Chapter 7. ImagineAir shutdown and simply disappeared. Surf Air Europe and Wijet clients received nothing during their liquidations. JetCard Plus stiffed Treasury Secretary Steve Mnuchin for over $200,00 before shutting down. Shortly after Private Jet Card Comparisons published a report last year on connections between the defunct jet card broker and New York-based UberJets, attorneys for Mnuchin said they had uncovered bank transfers between the entities.
JetSuite didn’t offer an escrow account to protect customer funds. It first touted early backing from JetBlue founder David Neeleman, and then later investments from JetBlue and Qatar Airways.
Several SuiteKey customers said they already had multiple providers. Others said they will gravitate towards pay-as-you-go programs or companies that offer escrow account options.