The 12th largest U.S. charter/frax private jet operator is shuttering as questions about its finances before the ‘safety’ grounding increase
Updated: From Flying Magazine: ‘The problem is that the safety issue doesn’t appear to be the cause of Jet It’s sudden service disruption—but cash does.’
‘On Friday, May 26, Jet It informed employees in a letter that their jobs were permanently terminated, and the company was closing down.’
Jet It’s fleet of HondaJets and its Phenom 300s and Gulfstream G150s continued to stay parked on the ground today after the fractional and charter operator grounded its VLJ fleet a week ago. Now, Flying Magazine is reporting it’s all over, and Jet It is shuttering.
Jet It owner options
Before apparently closing down completely, CEO Glenn Gonzales had been holding calls with owners midweek, according to a report in Flying magazine and other sources.
One owner tells Private Jet Card Comparisons during the presentations, Jet It offered the following options:
- Be patient with us
- The airplane can go to another operator
- The planes can be sold
- Owners can contract furloughed pilots on their own, independent of Jet It
At least some owners were given estimated values for their airplanes.
Timeline: Grounding to Gone
According to a timeline given to owners, “Jet It determined May 18 that out of concern for the safety of our clients and crewmembers,” it implemented “a safety stand down on the HondaJet fleet.”
It continued, “On Friday, May 19th, Jet It counsel provided Honda Aircraft Company with information regarding previous runway excursions, both documented and undocumented, along with an explanation regarding the most recent aircraft catching fire.”
The presentation, believed to have been given Wednesday, stated, “We received the first formal response yesterday stating (Honda Aircraft Company) do not agree with our decision and will provide a response to our request by (today).”
It said, “Jet It has reached out to a third-party SME in human factors, operational risk management, flight operations, braking system analysis, and runway surface conditions.”
Jet It said on Tuesday, May 23, it grounded its entire fleet “until we can understand (the) next steps from FAA and Honda Aircraft on the safety of the airplane.”
Employees have also been furloughed.
Craig Fuller, CEO of Flying and a Jet It fractional owner, wrote, “During our call with Gonzales, he put the blame for the failure of Jet It entirely on the Honda Aircraft Company, claiming that HondaJet aircraft suffered from a series of runway overruns. He cited a total of 20 incidents since the HondaJet was first introduced in December 2015. He compared that to the Embraer Phenom 100, which has seen 21 runway incidents since its first delivery in 2009.”
Fuller said two owners on his call questioned Jet It attributing the grounding to safety concerns, with one owner questioning if there were financial issues as well.
Flying quoted the owner as saying, “It sounds like you are bankrupt to me.”
Asked to comment on accusations that financial problems were behind Jet It’s decision to ground its fleet, Gonzales declined to comment.
An investor presentation (below) from 2022 showed the company expected a net loss last year of $23.2 million on $120.1 million in revenues.
Jet It financials
However, the undated correspondence suggested 2022 performance was being hampered by available capacity:
The company wrote, “HondaJet availability over the last four months has been less than 50%, greatly challenging our business. Needless to say, business operations to support 120% demand with only 50% of required inventory is extremely difficult. Therefore, the need to diversify the fleet and transition to a new platform.”
Gonzales then went public when he blamed HondaJet’s lack of support and aircraft reliability in an email to customers to pitch the new Phenom 300 program.
Previously, in a written statement, a spokesperson for the OEM said, “Jet It’s decision to ground their HondaJet fleet was made independently by Jet It. Importantly, neither Honda Aircraft Company nor any aviation authority has recommended this grounding. Therefore, we have no comment about the decision by Jet It to ground its fleet.”
Two other HondaJet operators that offer fractional and jet card programs, Volato and Jet Token, are continuing with normal operations.
(Editors Note: Updated May 26, 2023, @ 9:20 pm): Flying Magazine is reporting Jet It terminated all employees permanently and is shutting down. Additionally, regarding Jet It’s financial issues, it reports:
- “On Friday, May 26, Jet It informed employees in a letter that their jobs were permanently terminated, and the company was closing down.”
- “The poor service reputation that Gonzales attempted to pin on Honda Aircraft was likely a result of Jet It’s inability to pay its vendors, and not the HondaJet’s lack of quality.”
- “The primary hangar for Jet It, where all of the aircraft logbooks were kept, is in Greensboro, North Carolina…hasn’t been paid in recent months, so the hangar owners permanently locked Jet It out of the hangar.”
- “Of the 21 HondaJets that Jet It managed, at least 10 are currently in a maintenance shop. Three of the airplanes in the fleet currently have maintenance liens for unpaid bills.”
- “A representative for one maintenance shop said it has had one of the jets in the shop for months and wouldn’t release it because Jet It would not pay its $24,000 bill.”
- “Jet It owes Honda Aircraft more than $1.6 million.”
- “[A]t least two employees—aircraft sales executives for the company—are both owed more than $200,000.”
(Updated May 27, 2023, at 12:23 PM EST: Speaking earlier today, Gonzales disputed the characterization of hangar access. He said, “Airport access was returned to the hangar owner in conjunction with the furlough as the airports are controlled areas.”
Of the Flying report, he responded to the latest story on the shutdown by saying, “Following the response received from Honda, we needed to give people the chance to receive federal benefits while we work with them to determine a path forward.”
Gonzales declined to respond to additional questions.)
Owner vs. Wholesale Rates
Jet It fractional owners flew for as little as $1,600 per hour.
As fuel prices spiked last, some Jet It contracts apparently did not allow the operator to impose a fuel surcharge on its owners.
At the same time Jet It owners were reporting deteriorating service, charter brokers tell Private Jet Card Comparisons they were chartering HondaJets from Jet It for their clients.
Jet It was charging brokers net rates exceeding $5,000 per hour and as much as $8,000 for flights under one hour in the Northeast corridor between major airports.
The Jet It business plan allowed it to earn revenues from charter when owners hadn’t reserved airplanes.
A charter broker said, in retrospect, he was surprised and happy to be able to book flights from Jet It.
He noted other operators such as PlaneSense, Vista Global, and Wheels Up had dramatically cut back or shut off availability in the wholesale market as they struggled to meet the needs of their own members.
Complicated future for Jet It fractional owners
Chris Pratt, a business aviation veteran, posting on LinkedIn, writes, “One of the complicating factors in these situations is whether the original engines are on the aircraft. Programs often swap engines from a pool or use rentals while the original are in for service. Tracking down the correct serial numbers for each aircraft engine and putting the original engines with the correct aircraft can tie up ownership disputes for quite some time. This was a major factor in the Avantair debacle, and that case dragged on for years. Don’t assume selling the jets will be easy.”
Advice from an attorney
Prior to closing shop, I asked what advice Vedder Price aviation attorney David Hernandez would give to Jet It owners and fractional owners in general. He says, “A crisis situation requires immediate and comprehensive analysis. Unfortunately, most owners simply believe a crisis will never occur, and, frankly, many have never thoroughly read their program agreements. As a result, most owners are simply unprepared to handle most crises when they arise.”
He says all fractional owners should “thoroughly review your program agreements” right away so they have a basic understanding of their rights in case of a provider failure.
He recommends, “Determine all available options based on the relevant circumstances, create a resolution plan, and immediately execute the plan. Act fast because available rights and remedies evolve rapidly in a crisis situation, and those who delay may be left with nothing.”
He also cautioned against “relying on the advice of brokers or consultants because their primary concern is not to protect your rights under the program agreements.”
Editor’s Note: We are updating this story as relevant information becomes available.