JetSmarter aircraft

Learning from the JetSmarter Saga

[Editor's note: After the following article was published, Dubai, UAE–based Vista Global acquired JetSmarter and folded it into a larger online platform called XO.]

The good news is that the pure per-seat charter market has arrived: via JetSmarter, you can now propose or join flights on many popular routes around the U.S., Europe, and even the Middle East without signing up with a membership club or paying any monthly or annual fees. The bad news is that demand appears weak, and the market breakthrough has been overshadowed by negative attention focused on the provider that calls its future into question. 

Last June, as you may have heard, JetSmarter dropped membership requirements and stopped providing free seats on its scheduled shuttle flights, its signature benefit, leading to a spate of lawsuits from members accusing the company of fraud. Then a video of a disturbed and threatening passenger onboard a JetSmarter shuttle flight surfaced in the fall, followed in January by a scathing CNBC broadcast that reported the charter brokerage was losing millions of dollars monthly.

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The aim: to create a one-stop “digital jet marketplace.”

Whatever the dénouement of the JetSmarter saga, several takeaways are applicable to any lift access you employ:

1. Read the contract. If the plaintiffs are any indication, many JetSmarter members never read their membership agreement—and many others never even receive one. The agreement is on JetSmarter’s website and says in part, “JetSmarter reserves the right to change, suspend, or terminate any of the Services or benefits at any time, including, without limitation, changes, suspension, or termination of any routes, types of aircraft used and/or operators that perform flights, and changes to (or imposition of new) fees or other charges for services or benefits.”

While plaintiffs say they relied on assurances of free flights from sales personnel,the contract states that in joining, members acknowledge they have “not relied upon any representation, warranty or disclosure made by jetsmarter [sic] or any other person on jetsmarter's [sic] behalf, except as specifically provided in this agreement.” JetSmarter cites the  agreement in response to complaints about changes in member benefits and added and increased fees. 

If you’re not sure you’ll want to renew a contract with a provider, check its fine print before signing. JetSmarter’s says memberships “will be conveniently renewed automatically and you agree to be charged the applicable annual membership fee for the subsequent Membership Term(s) unless you provide JetSmarter a written notice not to renew at least thirty (30) days prior to the expiration.”

2. Recognize the limits of redress. If you become unhappy with a membership, jet card, or other deposit-model access program, your avenues of redress may be limited. The JetSmarter agreement mandates that disputes be resolved individually via binding arbitration, a common clause in such non-negotiable contracts, like those you enter into with financial-services and securities firms. Though the U.S. Supreme Court has generally upheld these clauses, lawsuits have been successfully filed in several states, which may be because those courts don’t view the JetSmarter contract as valid, suggests aviation attorney James Butler. “If one side has the option to change all the material terms, then arguably there is no agreement.”

Among other charges, the suits allege that sales staff misrepresentations constitute fraud, and they ask for damages ranging from $75,000 to more than $3.2 million to cover the approximately $10,000 to $100,000 the plaintiffs paid. But even if courts found such tactics fraudulent, customers wouldn’t be eligible for damages unless they could cite alternate flights they had to book and pay for because of JetSmarter’s alleged breach, says Butler, principal of Shaircraft Solutions.“Not being able to take a flight because the rules changed wouldn’t suffice.”

The possibility of a class-action arbitration has also been raised, but the variance among members—their joining dates, the flights they took, membership levels, and other differences—create impediments to amalgamating the complaints, as does the contract’s stipulation that disputes be arbitrated individually.

Ultimately,“while it may be emotionally satisfying [to sue], I imagine some JetSmarter members who think it through may determine there’s not enough potential upside to justify the out-of-pocket expenses” of a legal action, concludes Butler.

3. Understand the security risks. JetSmarter and other per-seat programs often tout the networking and hobnobbing opportunities that shared flights provide—you never know who you might be sharing a cabin with or what connections you may make. But the frightening downside of that fact became obvious to anyone who saw the widely circulated recent video of a JetSmarter passenger cursing and threatening fellow flyers on a Las Vegas–New York shuttle. (The aircraft made an emergency landing and the passenger, who was removed from it by police, was later declared mentally incompetent to face charges.) Unlike a commercial airliner, a business jet doesn’t have breach-proof doors or carry dozens of passengers ready to step up to assist in such situations. 

Members likely take it on faith that anyone who has thousands of dollars to spend on a jet program is of sound mind, or that the provider is effectively screening fellow travelers. Indeed, a statement on JetSmarter’s website highlights its rigorous security protocols: “Tom Ridge, the first Secretary of the U.S. Department of Homeland Security, serves as a JetSmarter board member and assisted in the design of a proprietary safety and security infrastructure on the ground—the only one of its kind in the aviation sphere.”

But the rigor of JetSmarter’s standards aside, operators, not brokers, are responsible for operation and security of all flights, and it’s entirely possible for a passenger you might not feel comfortable sharing a cabin with to get on board.

4. Protect your privacy. Privacy is a concern for many business jet travelers, so JetSmarter members may be surprised to learn that their agreement allows the company “to use Member's picture, including photographic, motion picture, and electronic (video) images; and voice, including sound and video recordings created while Member is utilizing the Services of JetSmarter, and grants JetSmarter the rights in perpetuity to use those images and recordings in any way it wishes without approval and without compensation.” The permission “shall continue forever. Member acknowledges and understands that he, she, or it may not enjoin any exploitation of the activities as described above,” the agreement reads. The member also “waives the right to receive any payment for granting this release” and “waives any right to inspect or approve” how the material is used. 

Many companies today, sensitive to consumer concerns about what happens to collected data and personal information, have explicit policies prohibiting its sale, sharing, or dissemination. It’s incumbent on you to ensure that the privacy policies of any company to which you supply personal information are in line with your expectations. 

5. Accept that charter isn’t cheap. WhenJetSmarter launched in 2012, it claimed to be able to find discount lift worldwide because its technology exploited inefficiencies that plagued the industry—shared flights and free seats came later. “Incumbent companies have zero experience in next-generation mobile technologies,” the company said in 2015. But the charter rates offered through its app are comparable to those available through other capable providers. 

Of course, you shouldn’t shop charter by price alone, but JetSmarter’s foundational argument that it provides much better prices than the clueless dinosaurs at traditional providers appears unsupported. Charter is a highly competitive arena, and the prices reflect the real costs of doing business and delivering service commensurate to the charges. Senior executives at some top management companies say charter rates, relentlessly driven down by brokers fixated on selling by cost, are now nearing economically unsustainable levels. Aircraft owners, they say, will conclude that their 15 percent cut isn’t worth the wear and tear on the airframe, while management’s portion can’t support the rising salaries for pilots, safety programs, infrastructure, and other investments. 

Whatever JetSmarter’s fate, growth at the company hasn’t met its optimistic projections, which included having more than 100,000 members and $2 billion in revenues next year. (In 2016, the company reported having fewer than 6,000 members and $124 million gross income.) The free seats were seemingly supposed to draw a critical mass of travelers that would create a self-sustaining community, but that has yet to happen. JetSmarter lists more than three dozen U.S. and 15 international origins/destinations for its flights, and crowdsourced flights currently proposed for each are displayed on its website and app. But most routes have few crowdsourced flights available, and the  majority of those displayed show only one seat (the would-be traveler’s) sold before their departure date passes. (The proposer gets his or her prepaid fare back in such cases.)

But the per-seat model remains alive. Last November, Florida-based MemberJets, which arranges shuttle flights between Teterboro, New Jersey and Miami, launched Sky380, which it calls “the first B2B private aviation seat marketplace.” And in February, New York City–based Wheels Up introduced its Connect Membership, a flight-sharing program.

So there appears to be a future for per-seat charter, but keep the above lessons in mind when shopping.

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