Refundable jet cards enable you to get your money back if you aren’t happy with the service or your needs change.
Several dozen jet card providers in our database offer refundable deposits. However, Volato’s agreement with FlyExclusive to take over operations spotlights one area where a refundable jet card doesn’t help.
Refundable jet cards are often sold as being more attractive than non-refundable.
That’s a yes and no.
There are good reasons to buy a refundable jet card.
If you take a few flights and are unhappy with the service, you can request a refund.
You can request a refund if you no longer need to fly privately.
Your flying patterns change and no longer fit well with the program. You can request a refund.
You decide you would rather spend $100,000 upgrading your media room. You can request a refund.
In the case of Volato, its Insider jet card did not guarantee availability.
The idea was they were confident enough that even without that guarantee, they would be able to fly you when you needed to go.
If they couldn’t – or if you wanted a refund for any of the previously mentioned reasons, you could request a refund.
It’s important to note that many refunds come with a restocking fee of up to 20% of the unused deposit.
However, the critical point is that you can get your money back.
What refundable jet cards are not is insurance against provider failure.
Volato has offered three options for its Insider members to transfer current flight credits to FlyExclusive.
Two options include adding funds to a new FlyExclusive, although assuming you can fly through those funds, you would come out whole.
If you do flights over 120 minutes, you could save money based on FlyExcusive’s Jet Club program (comparing the $100,000 levels of both programs).
What’s probably not in the cards is getting a refund from Volato.
At least, that’s what Insider card members are being told.
So, a key lesson.
Refundable jet cards are not a form of security if your provider stops providing its service or fails.
It’s important to note that neither are segregated accounts.
While some providers market segregated accounts as protection, it probably isn’t.
That’s because there is no restriction to keep the company from tapping into that account if their other accounts are dry.
Back to refundable jet cards.
Another possible flaw is that refundable programs enable a run-on-the-bank scenario.
In its lawsuit against AirX filed in April, Vista Global, which owns jet card sellers VistaJet and XO, noted, “Deposits paid by existing clients (prepaid jet card funds which Vista and others use as operating capital) were also called on following adverse media.”
JetSuite had a non-refundable jet card, but its court-appointed chief restructuring officer made the following points.
He wrote that JetSuite, in more than a decade of operation, had “a nearly impeccable safety record, a reputation for good pilots and management, and overall reliability and service among its customers.”
However, he added, “Notwithstanding its initial growth and operational expansion, the Debtor was beset by the incredibly tight margins common to the charter airline industry and was never able to operate profitably.”
In 2010, Warren Buffett told Berkshire Hathaway shareholders, “Even though NetJets was consistently a runaway winner with customers, our financial results, since its acquisition in 1998, were a failure.”
Buffett said that in his first 11 years of ownership, the private jet company incurred an aggregate pre-tax loss of $157 million.
Debt went from $102 million to $1.9 billion.
At the time, the legendary investor noted, “Without Berkshire’s guarantee of this debt, NetJets would have been out of business.”
Buffett proclaimed NetJets healthy and highly valuable during Berkshire’s 2023 shareholder meeting, and its jet card is non-refundable.
The point of the above is not to pick on JetSuite or NetJets.
Chances are the salesperson telling you their privately held company’s financials are impeccable has never even seen them.
From the stories I’ve heard, many companies fly close to the sun at one point or another.
They figured out how to stop the losses, probably found some extra funding, and flew out of the storm.
So whether the company is public—where you can see its finances in some cases—or privately held, where you can’t—don’t count on a refundable jet card being financial protection.If you want to see where you would stand if your jet card provider fails, try our Jet Card Haircut Calculator.
You may be better off than you thought.
Oh, and if it’s any consolation, I am beginning to hear about Jet It fractional owners who swore off giving money to another provider last year.
Like those who flew with JetSuite, I hear stories about all of the downsides of ad hoc charter—requotes after cancellations, extra charges, stricter cancellation terms, and the friction with every booking.
As they say, every rose has its thorns.
Some of our previous articles about the downsides of jet cards
1. Hard truths about your money and buying jet cards
2. What happens to your jet card and private jet membership deposits?
3. Caveat Emptor: Avoiding private jet scams, bankruptcies, and shutdowns
4. Six reasons not to buy a jet card
5. JetSuite bankruptcy payments prove bitter
6. JetSuite ‘was never able to operate profitably’
7. Jet It Lessons: What happens when your private jet provider fails?
8. Why an escrow account is important when buying a jet card