November 2, 2024
VistaJet gets plenty of media coverage. Very little of it is about what really matters to private jet flyers.
You will read two types of stories in the media about Vista Global and its flagship private jet flight provider, VistaJet.
One is about its never-ending funnel of lifestyle partnerships and offerings.
There are collaborations with top travel designers, plus programs for oenophiles, wellness addicts, art collectors, gourmands, youngsters, and even furry friends.
It’s terrific fodder for lifestyle journalists.
The other is about the group’s finances, which came under intense scrutiny after a Financial Times report earlier this year.
What’s missing is coverage that addresses VistaJet’s specific programs and why they are attractive to some very distinct groups of private aviation flyers.
But first, some background.
Regarding its finances, the Financial Times story gave Vista’s critics and competitors, who have long been skeptical of its owned-fleet model, plenty of fodder.
They pointed to Vista’s growing debt, net losses during the past three years, and the ratio of jet card deposits to cash.
Vista Founder and Chairman Thomas Flohr countered that the group’s Adjusted EBITDA profits have increased. That’s the measure he focuses on.
The debt is to fuel growth, he and other executives point out.
Vista has more than quadrupled its fleet since acquiring XOJet in 2018.
During that period, JetSmarter, Red Wing Aviation, Talon Air, Apollo Jets, Jet Edge, Air Hamburg, and Camber have all been brought into the group.
Flohr told Forbes last year he plans to grow from his current 360 aircraft to 1,000 by 2030.
In terms of the deficit of cash to deferred revenue, Flohr contends that it was a single-day snapshot – where things stood on December 31 of last year.
Moreover, he pegged the cost to fly his customers on all those aircraft he bought in the low 20-cent per dollar range.
And, of course, the entire document that the Financial Times used for its expose was an oversubscribed bond offering in which Vista raised $500 million.
In May of this year, rating agency Fitch wrote, “The company has so far been successful in refinancing as needed for bullet payments, and Fitch expects this to continue, which would further reduce the actual repayment needed in the short term.”
Still, competitors have no issue using an Ernst & Young going concern letter that was part of the bond offering and noted in the FT to spook prospects.
It’s par for the course in terms of how the industry sells.
If I had a dollar every time I was told this company or that one was headed down the drain, I would have enough money to fly privately.
And yes, companies do shutter. See JetSuite in 2020 and Jet It earlier this year.
In other cases, they squeak by. See NetJets in 2009 when Warren Buffett kept it as a going concern and Delta Air Lines and Wheels Up earlier this year.
So yes, the critics, at some point, may be right.
However, Vista will celebrate its 20th anniversary next year, so it is not a newcomer.
It survived the 2008 Financial Crisis, perhaps benefiting from its asset-light (for the customer) approach.
Anyone who has asked me about the financial viability of providers knows my response: “Don’t use your kids’ college funds to buy jet cards and fractional shares.”
Of course, the reason you fly privately isn’t to spend money. It’s to accomplish various objectives.
But on to the point of this article – why would you select VistaJet?
While there is no doubt that VistaJet is top of the league in marketing and public relations, with tens of millions of dollars in earned media, where it excels from a flyer perspective is what they offer to consumers – their two jet cards – The Program and VJ25.
Both are niche products, and in fact, for specific segments of flyers, there are little to no programmatic competitive options.
When I say programmatic, I mean programs that offer guaranteed availability and fixed or capped hourly rates, something flyers want by a margin of close to 10-to-1 over the alternative, dynamic pricing.
In other words, the risk calculation of Vista’s financials differs slightly from how critics often see it.
So, where is VistaJet differentiated?
One-way pricing means you are charged point-to-point.
You don’t have to pay for repositioning.
It’s standard within the U.S. for most programs or Western Europe for programs that sell there.
There are only a handful of guaranteed programs for transatlantic flights.
From there, it’s truly thin pickings.
VistaJet offers one-way pricing on a worldwide basis.
VistaJet’s one-way pricing covers the U.S., Mexico, the Caribbean, Hawaii, Canada, Europe, Asia, Africa, and the Middle East.
Additionally, South America, Australia, New Zealand, Alaska, and other places outside the PSA are available with a 20% premium.
If you don’t fly all over the world, it doesn’t mean much.
However, for the person who needs to fly between continents and regionally on a global basis, again, there are few and sometimes no other programmatic alternatives that offer guaranteed availability and one-way pricing.
VistaJet’s Program and VJ25 both enable members to book domestic U.S. and intra-European EU flights at fixed rates with as little as 24 hours’ notice.
There are limited options to book at 24 hours or less with guaranteed availability and fixed or capped hourly rates.
More impressive and a sweet spot for VistaJet is the 48-hour callout for international flights.
There are some exceptions, such as India, which is 72 hours.
However, outside of fractional programs, which require a five-year commitment, there often are no other guaranteed availability, fixed rate programs that provide users the flexibility to book a flight on Sunday to fly from Cape Town to Zurich on Tuesday.
Many – if not most – on-demand international one-way ad hoc charter bookings are non-refundable and non-changeable from the time of payment.
Yes, we are talking about losing $150,000 or more on a single flight because you had a change of plans.
Why fly to Lisbon if your meeting was canceled?
I’ve talked to subscribers who have lost that type of money because, yes, plans change.
Both VistaJet programs allow the same short-notice cancelations – 48 hours before departure without penalty.
It’s an important concept because once you lose six figures on a cancelation, one begins to understand that there are plenty of ways consumers lose money every day in private aviation outside of operator failures.
Another benefit of VistaJet is its low number of peak days – just 20 for the Program, and there is no surcharge.
VJ25 has 43 peak days, still below the industry average of over 50.
On peak days, beyond surcharges and longer booking windows, programs can move your departure by +/- 3 hours or more.
For many folks, that’s a dealbreaker.
Private flyers quickly learn that the aircraft experience can be quite different within a category.
A good example is the super-midsize segment, which is loaded with Citation Xs, a great airplane but essentially a stretch Excel/XLS, with a cabin height of 5 feet, 8 inches.
You may not want to fly coast-to-coast crouched over if you are tall. It’s particularly uncomfortable in the lavatory.
VistaJet is one of a few options that guarantee the Challenger 300 series with its stand-up 6-foot high cabin as a super midsize aircraft.
If you do want that stand-up cabin experience, an issue for short flights is the daily minimums on super midsize jets with jet card programs.
Many programs are two or two-and-a-half hours.
VistaJet is 60 minutes, plus 12 minutes of taxi time.
So again, do you want to pay 120 minutes for your 60-minute flight?
A while back, a subscriber needed a recovery flight for an on-demand charter when the airplane had a mechanical in Nairobi.
The broker secured another aircraft from another operator.
The cost was over $300,000 as the flyer had to pay for an aircraft to fly on short notice from Europe to pick him up and then take him on his planned flight.
VistaJet guarantees recovery flights at no extra cost for Program customers and for VJ25 except on peak days.
Yes, this is standard for many programs within the U.S. or within Europe, but not for international, which is VistaJet’s strength.
After buying Jet Edge and restructuring XO’s programs – getting rid of its guaranteed rate memberships, VistaJet launched VJ25.
VJ25 is targeted at flyers who need between 25 and 49 hours per year and gives most of the same guarantees as the Program.
It’s a very good product for somebody who has the previously discussed needs but isn’t a frequent flyer.
While VistaJet has interchange rates between aircraft types, your contracted rate applies globally.
That means if you have a Challenger contract, your hourly rate is the same in the U.S., Europe, or Asia.
VistaJet allows Program buyers to split annual payments into quarterly installments for a 5% surcharge.
If you buy 100 hours in a Global, you spend around $2 million per year on your flights.
That $500,000 represents 20 to 25 hours of flying.
So, while I often see pundits pounding the table about the risk, the flying time at the end of the day represents one roundtrip between the U.S. and Asia or the Middle East.
The VistaJet model is that it – not you – owns or leases the airplanes.
In fact, it has 17 ultra-long-haul Bombardier Global 7500s. Even at a discounted price, its investment was over $1 billion.
Its nearest competition is fractional ownership, where you, the customer, own the aircraft or at least part of it.
Fractional contracts are five years with penalties for early exit.
VistaJet contracts are three years with penalties for early exit.
Note: Early exit clauses need to be negotiated at time of contracting.
The important aspect is you only pay when you fly.
Fractional, for its many benefits, entails laying out your money for a share of an aircraft that costs up to $75 million, then waiting until your contract ends to see how much it’s worth.
It also entails monthly management payments.
If something comes up and you can’t travel for four months, you still pay the monthly management fees in the fractional model.
VistaJet’s hourly rates take all that into account, so it’s not saving you money, but if your needs are shorter term or you don’t have a crystal ball that goes out five years, it’s a neat option to consider.
Leona Qi, Vista’s President, Americas, points out Vista has also invested in its fleet.
.
While the Jet Edge and Air Hamburg fleet were already highly regarded, and much of the Jet Edge fleet had been recently refurbished, Vista is refurbishing both fleets to Vista design and standards, including faster WiFi and its signature silver exteriors with the red stripe.
That investment includes training for all its cabin attendants in conjunction with the British Butler Institute, MedAire, and Norland College.
The multi-week program includes training in firefighting, communication skills, service excellence, food safety and hygiene, and advanced plating.
Qi says the fleet standardization and training underscores what VistaJet offers and ad hoc charter can’t provide – a consistent product globally.
One interesting point of the bond offering is that VistaJet’s programmatic customers pay more than those who buy ad hoc or via brokers.
During the year ending December 31, 2022, the Program generated an average live yield per hour of $19,900 compared to $15,100 for on-demand.
That’s because that availability isn’t guaranteed. It’s available when Vista has an airplane in the right place and wants to sell it.
And yes, Vista is a key supplier to the wholesale market, and many brokers use its fleet.
In speaking to several brokers, their concerns center more around maintaining service quality and integrating the different operators.
According to the latest research with Private Jet Card Comparisons subscribers, while not a sample size big enough to be statistically projectable, VistaJet was down from last year and below average regarding Excellent or Very Good ratings.
That may be more of an issue for the target customer than Vista’s finances.
Then again, VistaJet doesn’t have much guaranteed programmatic competition for certain missions.
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