Think small, save big
By Mark Phelps - October 1, 2008
[Editor's note: On September 19, 2008, DayJet Services, LLC, discontinued its jet services and canceled all future flights, the result, the company said, of its "inability to arrange critical financing in the midst of the current global financial crisis." DayJet also said it was unable to honor customer reservations or issue refunds. Additional information about the company is available at www.dayjet.com.]
With charter, jet cards, fractional shares and full ownership already in play, charging by the seat offers yet another way to market the private jet experience. It seems to make great sense. Why force customers to charter an entire business jet if they need only a seat or two? Especially in today’s database-crazy world, it ought to be feasible to find enough would-be private jet passengers going in the same direction to develop a viable business plan.
The truth, however, is that the regulations regarding the operation of business jets on a per-seat basis are far from simple and the economics are tough. As a result, many companies that have attempted such operations have failed. Starting in February 2000, for example, an outfit named Indigo ran a per-seat service between Chicago Midway Airport and Teterboro Airport in New Jersey, using four 10-passenger Falcon 20s and, for three months, two 18-passenger Embraer Legacys, but it succumbed to a lack of funding in May 2003. A small charter operator in New Jersey called TAFT Air once proposed regular charter service to select destinations in Pennsylvania using Mitsubishi MU-2 turboprops but was stymied by the regulations it would face.
The move by on-demand charter providers into the per-seat business explains how regional airlines, once called “commuters,” got started. As the commuter airline industry grew and matured, the FAA and DOT determined that additional “airline-type” regulation was necessary to protect the flying public. According to regulators, a customer who charters an airplane is assumed to recognize a higher level of responsibility and due diligence than the person who books a single seat. Enjoying the marketing benefits of selling single seats and the relative freedom of being a charter operator has required providers to maintain a delicate balance.
And new companies keep trying to strike that balance in a variety of ways.
One such operation is Avion Private Jet Club, which works on a membership basis, with a one-time initiation fee of $20,000 for one passenger, $30,000 for two, $40,000 for a family or group of four, $75,000 for a corporate group of six specified individuals or $125,000 for 10 people. After that, annual dues equal half the current initiation fee, so if that fee rises, your dues do, too.
Avion books passengers on flights between New York and Los Angeles, using charter operators Avjet and XOJet as partners, flying Gulfstream and Challenger business jets. A round-trip seat costs about $15,000, “which compares well with $60,000 to $65,000 to charter a Gulfstream,” according to Avion founder and CEO Gary Mansour.
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