Complicated Skies: Tips for buying a jet card in an era of change

Jet card programs are changing – daily. Here’s my advice for buying jet cards

Jet card companies are changing rules and policies for both new and existing customers on a near-daily basis.

A number of the biggest players in the jet card segment have stopped taking in new customers. NetJets, Sentient Jet, and Jet Linx are off the board. So are Executive Jet Management, Flexjet, and Priester Aviation.

Still, around 40 players are selling jet cards with fixed or capped rates and guaranteed availability, so there are plenty of choices.

It’s this mode that is under pressure.

Memberships that use dynamic pricing – without caps – price your trip as if you are calling a broker or operator on a trip directly.

If the cost of delivering the trip goes up, a dynamic pricing program increases your price.

In fact, the spike in on-demand charter costs has been driving more private flyers to fixed/capped rate programs that guarantee availability.

A Private Jet Card Comparisons analysis of dynamic pricing versus fixed/capped rate jet cards using QUICK COMPARE FLIGHT PRICING last month found fixed-rate jet cards offered lower flight prices in 25 of 30 scenarios.

The average savings was over $5,000 per segment.

As I detailed in The future of Jet Cards: You can’t always get what you want; the market is changing and what was being offered wasn’t sustainable.

Unless there is a catastrophic decline in demand – there is a new reality to buying into a card program.

Honest conversations

Here’s what I believe you need to think – and talk about with providers:

• The rules may change after you join. Have your lawyer review the contract so you can understand what type of rights the provider has to make unilateral changes that impact existing members. Some programs clearly state they can make changes with as little as 30 days’ notice. Virtually all include a Force Majeure clause. We are in a global pandemic where many industries – like business aviation – are suffering from supply chain issues.
• Examine peak days and peak day policies. Programs are adding more peak days – and higher surcharges. The standard right for providers to accelerate/delay your departure by three hours has now expanded in some cases to the day before or after. How flexible are you?
• If you are joining a non-refundable program, consider asking to add a refund clause if they make any material changes to the program. If they decline, that’s fine. You are making a decision with your eyes wide open. It may mean that you want to join at a lower level.
• What benefits do you get from giving more money? While the main perk had been longer rate locks and bonus hours, some programs offer fewer peak days, shorter call-outs and daily minimums, something that could be more valuable as others add them. More money may also get you a higher status against future changes – maybe.
• Ask your providers how they are dealing with the current situation: Record Demand Means A New Normal, New Rules For Private Jet Flyers. Anyone who says they haven’t been impacted is not being truthful. I know of some providers that seem to be faring better. They have different ways they are dealing with it. Ask them to explain.
• For broker programs, ask them about the providers they use – who are they? What issues they are having? What should your expectation be if you want to book an airplane at the contracted call-out – be it 24 or 96 hours. Will that be a problem? Will they offer compensation if they can’t get a plane? They may not – but again – you are calibrating your expectations. And most of all – get any commitments in writing added to your contract.
• If you are looking to switch providers because of delays or service issues, there may not be greener grass. You may be going from the frying pan into another frying pan. If the rules no longer make sense – longer call-outs, daily minimums, etc, that’s a differenty story.
• Moderate Expectations: Response levels to your phone calls and emails isn’t where it should be. Companies are aware of this. Hopefully it will improve. However, it’s not sure as we get into the busy holiday season. I use Instacart for grocery shopping. It can be frustrating seeing items ordered not being fulfilled until the shopper sends a picture of empty shelves or wilted lettuece. It’s hard to send a picture of an aircraft still at the MRO that was supposed to be flying again last Friday.

‘Unimaginable’ demand

“It was unimaginable 15 months ago when transaction activity had ground to a halt as a result of the pandemic, that in September of this year, new aircraft would be trading at premiums, the OEM’s would have backlogs of one to two years in their most desirable models, pre-owned values would be up 20-to-30% plus year-to-date, and there would be effectively zero supply in most modern, pre-owned aircraft markets; however, that is exactly what has happened,” said Paul Kirby, EVP at NetJets’ QS Partners, its aircraft brokerage arm.

Per Marthinsson, EVP of Avinode Group, which is an online database of charter jets used by brokers, says, “What we’ve come to expect in the past is no longer possible.”

Looking towards the future, he believes the ride will be turbulent. “I don’t know what will change in the next 12 to 18 months unless there is a dramatic slump in the economy.”

Changes are constant

Remember to study the details. For the Caribbean, I’ve seen some programs doubling surcharges. Daily minimums and lead time to book those fixed and capped rates are increasing.

The program you looked at three or six months ago may be very different now.

Various discounts are being eliminated or reduced. Some programs have implemented blackout dates.

I expect more announcements ongoing. Hourly rates are going up—blackout dates may be coming to programs that never had them and so forth.

In working with subscribers who use the JET CARD DECIDER, there are still options – just not as many.

Depending on your situation, you may find it beneficial to just charter flights on a one-off basis. In other instances, fractional ownership is becoming more attractive.

Demand is through the roof. There are supply issues – and supply chain and labor issues.

I won’t say the airlines aren’t an option if you are just going solo, have no checked luggage, and can grab a nonstop flight. But as somebody who regularly flies the airlines, I will say they aren’t a pleasant one.