““CEOs go to their vacation homes just after companies report favorable news, and CEOs return to headquarters right before subsequent news is released. More good news is released when CEOs are back at work, and CEOs appear not to leave headquarters at all if a firm has adverse news to disclose. When CEOs are away from the office, stock prices behave quietly with sharply lower volatility. Volatility increases immediately when CEOs return to work.” —David Yermack, a New York University finance professor, whose recently released study shows a correlation between when CEOs take their private jets on vacation and movements in their companies’ stock price ”
Share a ride, save a bundle?
Conceptually, it makes sense: share the expenses of a flight among unrelated fellow travelers and slash the cost of charter. But flight sharing, or per-seat charter, has proved difficult to translate into a workable model for travelers or charter entities. Witness the 2008 demise of DayJet, the Florida-based air-taxi startup.
Nonetheless, several companies continue to promote this budget-minded approach to charter flying, using a variety of service and revenue models. If you're the type of person who wouldn't mind sharing a business jet with a stranger, how close is per-seat charter to affecting your potential travel plans? That depends on where you're going and when you want to get there. You can share a flight daily between the Northeast and southern Florida through one provider. But social-network-based companies established to book trips going anywhere you want to go admit they could be years away from arranging any meaningful number of shared flights.
Federal rules that prohibit charter flights from operating like airlines constrain the ability of flight-sharing services to schedule and market shared flights. To work within these strictures, a handful of flight-sharing promoters model their businesses on Web-based social networks.
Cogo Jets (
www.cogojets.com), Jet Charter Pool (
www.jetcharterpool.com) and Jet-It-Together (www.jet-it-together. com) are online businesses aimed at creating virtual communities of business jet travelers. Members looking for travel mates to share costs can post prospective flights or sign up for or suggest an alternate travel date for a posted flight. The flight-sharing company supplies a selection of aircraft and prices for all proposed trips. Once the prospective passengers have agreed on the arrangements, the company books the flight. The concept is simple,
but the execution isn't.
"To do it within the DOT regulations, it even takes current members some time to wrap their heads around the best way to use this tool," said Jamie Walker, president and CEO of Cogo Jets, a sister company of charter broker Jet Linx based in Omaha, Neb.
The social-network model also requires a critical mass of members to be successful. Cogo Jets, though declining to provide current membership numbers, estimated that it will need 100,000 members to become workable, and admitted it is years from reaching that figure.
"It's not in our three-year plan," Walker said. "A five-year plan is a little more realistic."
Cogo, which originally charged $500 for the first year's membership fee, has dropped its price to $99.
Jet-It-Together, which launched its site and service last June, claims more than 2,000 members and has had 34,000 searches for flights on its site and 160 trip requests. But the company declined to say how many shared flights it has arranged. John Ackerman, one of four cofounders of the Westborough, Mass. company, said interest has been strong from business jet travelers "frustrated with the high cost of fractional programs, card programs and buying hours up front."
Membership is currently free, though Jet-It-Together plans to institute a charge. Its revenue model is based on adding a percentage of the flight cost as a service fee, but the company doesn't expect to organize many flights or see meaningful revenue in the near term. "We do believe it's going to take quite a bit of time" to be successful, Ackerman admitted.
Jet Charter Pool president and founder Sam Chanana said he believes adoption of the social-network flight-sharing model has been hampered by a lack of technology savvy among today's business jet travelers.
"It's hard to get these older folks to adapt to the Internet, Facebook and Twitter," Chanana said. "These Internet communication forms are critical" to the success of the flight-sharing model, he added.
Based in San Francisco, Jet Charter Pool earns its revenue from membership fees, currently $2,600 per year. (You can also buy three- and six-month memberships.) Chanana said that, to date, the company has not arranged for a flight with more than two parties aboard.
www.flygreenjets.com), based in West Palm Beach, Fla., arranges shared flights on high-traffic routes, primarily along the Eastern Seaboard and to and from Los Angeles. The company guarantees a low per-seat rate and takes on the risk of filling the aircraft.
"You can fly anywhere with Marquis Jet," noted Dean Rotchin, Greenjets' president and CEO, referring to the jet-card company. "With us you can fly only on our network, [but] for people doing a lot of trips between these markets, it's an unbeatable value."
Greenjets, which began service a year ago, operates one to three flights per day between Boston, New York, Chicago and south Florida. Flights up and down the East Coast cost about $3,500 per seat, and members can bring one guest with them at no extra charge. Membership costs $7,000 per year.
"There's a latent market of about 25 million trips [annually] that are perfectly qualified to do this as opposed to the airlines or the private [jet] solutions at
five times the price," said Rotchin. But a key to Greenjets' success in the difficult per-seat/shared-flight charter market is adding the personal touch. "There's always human interaction and real people working here," he said. "Try to do it in a totally automated fashion and it's not going to work."
Pairing clients who travel between Aspen and other high-traffic points is the goal of Evojets (www.evojets.com), a charter broker based in the Colorado ski town. "If they're going to New York, Los Angeles or Miami, typically we can find them a match," said Christopher Kelly, a partner in the company. "There's enough demand that it meets the critical threshold where you can have a somewhat regular service."
Kelly estimated that Evojets puts together three to five shared flights per month, with costs split evenly among the passengers. "It works particularly well in Aspen," he said. "People in Aspen have flexible schedules."
Evojets has no plans to expand the service, and Kelly said he's doubtful about the wider potential for flight sharing or per-seat charter. "We found it logistically challenging enough with two people's schedules, let alone a plane full of picky travelers," he commented.