Volato expands PSA, adds revenue guarantees, upgrades

Volato, expanding its HondaJet fractional program with Gulfstream 280s this year, unveiled a series of significant program changes yesterday.

Changes to the fractional program include a revenue-sharing guarantee, an expanded primary service area, guaranteed upgrades to larger or longer-range light jets, and a reduction in peak days.

Except for the peak day reduction, the changes only apply to new customers.

The changes don’t impact its jet card offerings.

Last month, Volato said it expects to receive two G280s and eight to 10 HondaJets through the end of the year.

“We are thrilled to introduce these updates to our fractional program, which provide even greater value to our customers and make our fractional program more competitive,” says Matt Liotta, CEO of Volato.

He continues, “Our goal is to consistently exceed the expectations of our fractional owners by providing them with a best-in-class private aviation experience, maximum value, and flexibility.”

Revenue sharing

A core element of Volato’s fractional program since its 2021 launch has been revenue sharing with owners.

Owners get a share of the revenue from their tails. That includes their flights, flights by other owners, jet card members, and ad hoc charter customers.

In Q2 2024, non-owner flying comprised 56% of revenue flight hours.

Since its launch, Volato has paid owners $8.5 million from the program. However, there wasn’t a minimum guarantee.

The fractional owner’s revenue share is now guaranteed based on 650 occupied flight hours for their tail during a calendar year, even if the aircraft flies less.

Under the new plan, the monthly revenue share guarantee on the HondaJet for 1/16th share buyers is $3,047, a 1/8th share owner would see $6,839, a 1/4th share gets $15,167, a half share yields $34,667 per month, and a full share would produce $72,042 (table below).

The revenue shares are paid monthly via ACH transfer.

Since a 1/8th share owner pays $7,200 per month for management, the $6,839 rebate essentially reduces the net expense for owners (not including the cost of acquiring their share or flying) to just $361 per month.

Volato Revenue Sharing Guarantees

Source: Volato

Quarter share owners who pay $10,600 monthly in management fees have a $4,567 surplus.

A half-share owner who pays $18,500 in monthly management fees would have a $16,167 monthly surplus.

If you bought a full share, you would have a surplus (monthly management fee paid plus rebate received) of $34,792.

80 hours of free flights

According to our calculations, owners who buy a full aircraft share get over 80 hours of free flight time annually.

That math is $447,000 in annual management fees paid and $864,504 in charter rebates returned.

The surplus – rebates received plus management fees paid – equates to about 80 hours of flight time based on the current occupied hourly rate of $3,850 plus fuel and FET.

A 1/4th-share owner would receive about 11 hours free annually based on the rebates.

G280 buyers get similar revenue shares.

Since Volato’s program is not based on entitled hours, executives have previously said it’s not uncommon for owners to underfly compared to traditional fractional programs where a 1/16th share means flying 50 hours per year or a 1/8th share equates to 100 hours per year of occupied hours usage.

Volato also offers an option without management fees but with higher hourly rates, targeting infrequent fliers.

Volato’s primary service area

Occupied hours are another important part of the change.

Volato’s fractional owners are currently charged repositioning fees for some Continental U.S. flights.

New owners will no longer be subject to repositioning charges for flights that start and end in the Continental U.S.

The legacy PSA impacted flights departing more than two hours from Atlanta, St. Augustine, Fort Lauderdale, Houston, Baltimore, and Carlsbad.

The change means the program will be more attractive to fliers in the Pacific Northwest, Mountain states, and Upper Midwest.

Volato has positioned the HondaJet as more affordable than the Phenom 300.

Executives say the HondaJet can perform about 80% of the Phenom 300’s typical missions.

However, the VLJ has less range and a guaranteed cabin capacity of four passengers versus six to eight for the Embraer light jet.

Guaranteed upgrades

The biggest change attracting joiners will probably be a new guaranteed upgrade program.

HondaJet fractional owners can now upgrade to a light jet at an upcharge of 50% (below).

A 1/16th-share owner pays $4,400 per hour, fuel, and FET for their HondaJet flights.

Volato Light Jet Upgrade Pricing

Source: Volato

The program is designed to supplement the four-seat HondaJet and its range, typically best suited for missions under 2.5 hours.

Owners who need five or six-seat solutions or better nonstop range for some flights can now stay within the program.

The upgrade program’s daily minimums, peak days, and primary service areas are the same as those for the HondaJet.

Fewer peak days

Finally, new and current owners will see a further reduction in peak days.

Peak days are now down to 46 dates from 70 last year.

Peak days do not have a surcharge. However, they require 72 hours’ booking notice instead of 48 hours.

They also have the standard +/- 3 hours flexible departure time.

Existing customers

Last year, Volato ranked as the 16th-largest charter/fractional operator in the U.S.

Liotta also addressed the changes for current fractional owners.

He tells Private Jet Card Comparisons, “Volato would like to emphasize that while our new standard terms apply to new contracts, we recognize the unique situations of our current customers.”

He says, “We are committed to working closely with our existing customers to help them understand how the new terms compare with their specific agreements. Additionally, all customers will benefit from the reduction in peak days, offering greater flexibility. We encourage existing customers to reach out for personalized assistance.”