November 22, 2024
Jet AI, formerly Jet Token, will escrow 75% of the initial deposit for members joining at its $250,000 deposit level and above.
Las Vegas-based Jet AI, formerly Jet Token, has launched a national jet card program with an escrow account twist.
The publicly traded 2021 start-up makes the move as it expands its jet card brokerage.
It initially launched by selling fractional shares in the HondaJet.
It then added a regional off-fleet jet card program via Cirrus Aviation, which operates its VLJ fleet.
Now, it also Jet AI plans to add Challenger 3500s through a fractional program.
The new Jet AI jet card program, announced today, offers a 48-hour callout.
It guarantees availability and fixed hourly rates within the Continental U.S.
Buy-in is $50,000, $150,000, $250,000 or $500,000.
There are fixed rates for VLJs, Light Jets, Midsize Jets, Super Midsize Jets, Large Cabin, and Ultra-Long Haul aircraft.
Daily minimums range from 60 to 120 minutes, plus taxi time.
There are 45 peak days, the two days before and after national holidays.
“Building on our successful regional jet card program, we’re excited to enter the national market with a new and thoughtfully constructed offering,” said Executive Chairman Mike Winston.
Jet AI is also offering an interesting twist on escrow accounts.
Members who deposit $250,000 or more can opt for an escrow option.
Seventy-five percent of funds will be held in escrow, with funds released quarterly in 25% increments unless the client uses non-escrow funds more quickly.
There is a 2.5% administration fee based on the initial deposit and an additional 0.25% fee on existing funds per quarter.
Winston added, “We’re particularly enthusiastic about the escrow option, which offers peace of mind to jet card buyers through our relationship with third-party administrator Avitrust.”
Members must acknowledge and accept or decline the escrow option when they join.
The move comes after Wheels Up and VistaJet were criticized over the past year for having more deferred revenue than available cash.
To mitigate risk, VistaJet allows larger customers to prepay every quarter instead of annually, typically for a 5% surcharge.
Its Founder and Chairman, Thomas Flohr, said the deficit was related to its airline-style model.
He said Vista takes the risk of buying airplanes, and its losses are based on how it depreciates aircraft.
The company is profitable on an EBITDA basis.
Wheels Up, which is a hybrid, secured a $500 million investment led by Delta Air Lines as it seeks to move toward profitability.
Delta CEO Ed Bastian told members during a client event at The Masters that the private jet company is a critical element in his premium market strategy.
Under the fractional model, share owners are funding fleet acquisition.
Broker jet card models, like Jet AI, need the funds available when their jet card customers call to book their flight since they are securing the lift through third-party operators they have to pay.
READ: What happens to your jet card and private jet membership deposits?
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