HondaJet fractional operator Volato increases order; adds charter flights

HondaJet fractional operator Volato increases order; adds charter flights @flyVolato @HondaJet #HondaJet #privatejet.

By Doug Gollan, January 5, 2022

Volato, which along with Jet It and Jet Token sells HondaJet shares, opens its fleet for on-demand charter flights

An in-depth analysis of Volato’s HondaJet pricing and costs and its target of fractional fleet Phenom 300 owners

Start-up fractional share seller Volato has increased its firm order for the popular HondaJet. The announcement, made yesterday, firms up five options from its original order and adds 10 more.

Separately, Atlanta–based Volato said it now allows non-owners to book charter flights. A jet card is still in plans, according to a spokesperson.

With an innovative charter rebate program that includes owner flights hours, the moves quickly position the new entrant as a player to watch.

According to the announcement, the future aircraft will be added to Volato’s home base located at Peachtree DeKalb Airport in Atlanta and across the nation based upon owners’ needs.

The primary service area where owners aren’t charged for repositioning is flights within two hours of its bases. Currently, it operates from Peachtree-De Kalb, St. Augustine (SJE), Fort Lauderdale (FXE), and Baltimore (MTN).

It plans to add Carlsbad this quarter with bases in the Midwest and Texas later this year.

Comparing Volato, Jet It and Jet Token

Volato is one of three providers currently selling shares in the popular very light jet.

Jet It launched in 2019 and recently added Gulfstream G150s to give members a nonstop solution for longer flights.

Las Vegas-based Jet Token, like Volato, started operations last Fall. However, it plans to focus on the Western region.

Each has taken a different approach. Jet It sells shares by the day and allows qualified owner-pilots to fly from the left or right seat.

Jet Token only sells five 75-hour shares and two jet cards, or 425 hours per aircraft. Saying the HondaJet requires maintenance at 600-hour intervals, it thinks the less is more approach with fewer owners means less need to go off-fleet.

Traditional fractional model

Volato uses the traditional fractional model with shares starting at 50 hours and representing 1/16th of 800 hours per year per aircraft. However, it offers a charter revenue rebate which we analyze below.

The current fleet has five HondaJets. After starting with one owned and one leased aircraft, it leased one more and then bought two of the very light jets in December, which it fractionalized.

CEO Matt Liotta tells Private Jet Card Comparisons that there is one more delivery in Q1, three more will come in the second quarter, and two more in Q3.

The company is hoping to have as many of the aircraft join the fleet by 2023 as possible, Liotta says. He is also looking for additional leases, all of which should push its fleet to more than 20 jets over the next two years.

Jet It currently has 21 HondaJets and two G150s.

Volato differences

Volato pitches a four-seat configuration with an extended galley.

The extended galley has a fresh brew coffee system, a dual divided ice draw that keeps beverages separate from ice used in drinks, and more storage for snacks and catering.

However, several will be in the more typical five-seat configuration. The fifth seat replaces the larger galley area. There’s no difference in legroom for the four-facing seats in the four or five-seat layouts. There is also a belted lav and an option for a single pilot, which allows up to seven passengers – five in the cabin, one in the cockpit, and belted lav.

Liotta says the company is still focused on the four-seat version. While you can buy into either configuration, for flying, you can request the five-seat version but aren’t guaranteed which version they will get.

Charter pricing

Separately, Volato is now selling third-party on-demand charters. The flights are priced at $4,000 per hour, plus FET and repositioning. They can be requested in advance but are only confirmed within 120 hours of departure.

Liotta says the process is being managed carefully to ensure charter bookings don’t bump members off-fleet. Owners have guaranteed availability with call-outs up to 24 hours before departure.

Last month the start-up hired former Jet It Chief Pilot Azim Sumar. Volato flights operate under Part 135 rules, which mean owners pay the 7.5% Federal Excise Tax.

Owner Charter Revenue Rebates

The company’s ownership model (see analysis below) gives owners varying charter revenue rebates from $1,000 to $1,250 per hour. For a quarter share – 200 hours – you get $1,150 per live hour from your tail, including your flights.

That means if your tail flies 800 hours and you own a quarter share, you will receive $230,000 in annual rebates (200 hours multiplied by $1,150 per hour).

Volato HondaJet Elite S Cost Per Flight Hour (1/4-Share, 200 Flying Hours/Year)

Volato Financial Pro Forma (200 Hours)Hours/Costs
Annual Purchased Share in Hours 200
% Aircraft Share Purchased 25%
Annual Tail Live Hours 800
Annual Owner Hours Flown 200
Contract Years 5
Initial Purchase Price $          1,300,000.0
Monthly Management Fee $                 8,500.0
Monthly Management Fee Per Year $             102,000.0
Hourly Rate $                 3,200.0
Fuel Per Hour (variable) $                    600.0
FET at 7.5% $                    285.0
Estimated Residual Value  $             572,000.0
Hourly, Fuel, FET  (Hours x Years)+(Inclusive Hourly Rate + Hourly Fuel) $          4,085,000.0
Cost After Residual (Purchase Price – Residual Value) $             728,000.0
Management Fees (Annual Management x Years) $             510,000.0
TOTAL COSTS (Hourly + Fuel, Cost after residual, Management) $          5,323,000.0
TOTAL FLIGHT HOURS (over 5 years)                       1,000
FULLY LOADED FLIGHT HOUR COST $                 5,323.0
Charter Revenue Rebate/Hour $                 1,150.0
Owner Share of Live Hours (Purchased Aircraft Share in %/Tail Live Hours 200
Owner charter rebate per year $             230,000.0
Charter Rebate over 5 years $          1,150,000.0
Source: Analysis of Volato data by Private Jet Card Comparisons

While you can review the above, a quarter share (200 hours) acquisition of a HondaJet Elite S is $1.3 million. Estimating a residual value at the end of term (5 years) at 44%, or $572,000, puts your cost of ownership – not including tax benefits – at $728,000.

The hourly rate is $3,200, plus 7.5% FET. Current fuel is estimated at $600 per hour. You are billed actual from the engine start to shut down, and there’s no tax time billed. If you fly your 200 hours per year, the 1,000 flight hours over five years cost $4,085,000.

Management is $8,500 per month, $102,000 per year, and $510,000 over five years.

Altogether ($728,000 cost of ownership + $4,085,000 cost of flying + $510,000 management fees), owning a quarter share and flying 200 hours per year will cost $5,323,000 per our analysis.

Deducting the charter rebate of $1,150,000, reduces your out-of-pock to $4,173,000.

If you fly 1,000 hours over five years and the tail flies 4,000 hours, your inclusive hourly rate is $4,173.

Flying Less

One significant advantage of Volato is it doesn’t matter much if you don’t fly, so long as your tail is in the air.

One downside of traditional fractional ownership is what happens if your needs change mid-contract.

Based on the tail clocking 800 hours, our analysis found that if you buy 200 hours but only fly 50 hours per year, your inclusive hourly rate is still just $4,437 per hour. Without the charter rebate – in the traditional fractional model, it would be over $9,000 per hour.

Under the traditional fractional ownership model without charter rebates, if you owned a quarter share and for one year, you could only use 50 hours, your effective rate for the life of the five-year contract would rise to $5,541 per hour. With Volato, the fully inclusive rate would be $4,188 per hour. That assumes the tail still flies 800 hours.

You can also fly as much as you want, according to Liotta. So if you buy 200 hours, you can fly 300 hours one year if needed, and then 50 hours the next.

You were wondering how Volato compares to Jet It? That isn’t easy to generalize as Jet It uses a by-the-day formula.

For example, Volato’s pricing favors if you fly Miami to Tampa, overnight in Tampa, then fly the next day to Orlando, overnight, and then fly back to Miami on day three – three short flights on three different days.

The day-based Jet It formula wins if your profile makes this trip in one day.

HondaJet vs. Phenom 300

Most importantly, Liotta says his competition isn’t other HondaJet sellers. He is targeting owners with NetJets and Flexjet and their Phenom 300 fractional programs.

Liotta says most fractional Phenom 300s fly with four passengers or less, and most flights are under two-and-a-half hours. He believes the HondaJet is a more cost-effective option for those missions.

By expanding bases nationwide, Volato can compete against the share offerings from NetJets and Flexjet, he says.

Repositioning is only charged when you leave from an airport that’s more than two hours from a base, and that repositioning fee is only based on the difference. If your flight is departing 150 minutes from a base, you pay the incremental 30 minutes.

Volato doesn’t have minimums (neither does NetJets for its Phenom 300 program), and it doesn’t charge taxi time (both of the big fractional players charge 12 minutes per segment).

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