For nearly 13 years, jet cards offered an optimal solution for private flights.
Spurred by the abundance of private jets available for charter post-Great Recession, the number of providers more than doubled.
Many of the membership programs offered fixed or capped hourly rates with guaranteed availability. Programs offered to find you a jet with as little as five or 10 hours’ notice. Rates were in line with calling a broker on a flight-by-flight basis, but once you choose a program, you could reserve your flights in minutes.
For those who weren’t flexible about when you needed to go, there might have been two dozen peak days. They had longer booking windows and often minimal surcharges, but blackout dates were rare.
In other words, you received similar benefits to fractional ownership, sans buying part of a jet and the hefty monthly management fees paid whether you were flying or not. With cards, instead of the five-year fractional contracts, you could buy in increments of 25 hours or $100,000, sometimes less. When you needed more, you bought more. It was easy to switch providers if they didn’t perform.
“It was like dating the prettiest girl in town and she never asked for a ring,” one private flyer told me.
With a low cost of entry and funds that never expired, private flyers often had multiple jet cards. One might offer discounted transcontinental flights; another didn’t have a surcharge for the Caribbean, a third was advantageous for same-day roundtrips.
While in most cases, jet cards only promised a category – light jet, midsize jet, instead of the specific type you get with fractional ownership, for many it was a better solution.
According to Argus Traqpak, flight hours by charter operators returned to their pre-recession levels by 2015. As of this year, fractional operator flight hours have yet to reach their 2007 peak.
The glory days for jet cards are mainly over, at least for now.
Card sellers are retrenching as demand for private flights is harder to fulfill with the available aircraft fleet, limited by a shortage of pilots, supply chain and other operational issues.
Wheels Up, in reporting larger Q3 losses on record revenues, said pilot attrition kept it from flying its full schedule.
NetJets, Sentient Jet, and Jet Linx, three of the biggest jet card sellers, have stopped accepting new customers. NetJets, the largest charter and fractional private jet operator, is telling existing clients it might not be able to renew their cards when they run out of hours.
While a half dozen companies have put a halt on new card sales, there are still around 40 providers offering cards with fixed or capped rates that give guaranteed availability – with significant differences in many cases.
Jet Card Changes
Air Partner added over 30 blackout dates. Clients can use jet card funds to book charters at on-demand market rates on those dates. They also lose recovery guarantees.
Sentient, which sold $450 million in cards last year, put a daily limit on flights it will book. It is meant to align reservations with the capacity it can secure.
Jet Linx created three different member tiers akin to frequent flyer programs. On high-demand days – there are plenty – it can ask Tier 3 customers to shift their flights by a day in either direction.
While not optimal, all three believed the changes would prevent a meltdown during the upcoming holiday period when demand is expected to surge to new levels. Executives hoped by giving customers fair warning, they could plan ahead or even seek alternative solutions.
Providers that are still taking new clients have changed programs with extended lead time to book, increased daily minimums – the minimum amount you are charged, even if your flying time is less, more peak days, higher surcharges for peak days and travel outside the Continental U.S., and hikes in the hourly rates they charge. Some have gotten ridden of long-flight discounts.
In other words, jet cards are getting more expensive and more restrictive.
For long-time jet card flyers used to multiple years without rate increases, bonus hours when they bought and renewed, and white glove service, it has been a rude awakening.
Still, demand for the fixed-rate programs has never been higher. New flyers continue to come into the market and on-demand charter rates surge.
Flyers, who for years used two or three brokers, playing them off against each other, are now finding those market-based rates are higher than in the past. Specific aircraft types can’t be found.
If something goes wrong with the first aircraft, re-quotes can be 50% more than the original price, which in some cases was 50% higher than what they were paying earlier this year.
A Seller’s Market?
It’s a sellers’ market. Still, one executive tells me, “There is competition for each sale.”
That’s an important point to remember when you are buying. While some of the biggest names are on the sidelines, there are options from large and small players available.
Wheels Up announced increased pricing and rules for new members. It is restricting flying for your first 90 days if you deposit $100,000 or less. However, if you put down $200,000, you can fly right away – except on peak days – there are only 20. If you deposit $400,000, you can fly right away, including peak days. There are only 10 dates, although the surcharge doubled to 10%.
On the flip side, for new joiners it has combined its light jet and King Air program to guarantee either or. In other words, if you request a light jet, you could end up with a turboprop and vice versa. If you were booking the King Air for its eight seats, that could mean needing to book a super midsize jet instead. Light jets only guarantee six seats while midsize jets guarantee seven seats.
FlyExclusive, the fifth largest operator, based on fractional and charter flight hours, revamped its Club jet card. It got rid of daily minimums and expanded the fixed-rate service area across the Caribbean, Central America and Mexico. However, it increased peak days from 15 or 20 to 45 peak and high-demand days, where surcharges now range from 50% to 100%.
Both are excellent examples of what Jet Cards 2.0 might look like. They will be more nuanced, and you have to really sort through the details to figure out what part of your flying needs each best covers.
Vista Global’s XO lengthened lead time to book on its fixed rate program to 72 hours from 24 hours. It increased hourly rates by 7.5%, daily minimums and eliminated some long-flight discounts. On the other hand, it increased discounts for its dynamic pricing memberships, where prices vary flight-by-flight.
Jets.com and Magellan Jets, two midsized brokers, both raised hourly rates, extended callouts and made other changes, in the scheme of things, relatively minor, unless they impact you.
I’ve noted over 120 changes since the beginning of the year across the over 50 U.S. programs I track.
The bottom line is if you are doing the standard New York to Palm Beach run, you likely will end up paying more. There are also fewer options where you will be able to wait until Thursday night to see what the weekend weather is like.
A big unknown is what the major players currently on the sidelines will offer when accepting new customers. It seems likely smaller players are not going away.
During Corporate Jet Investor in Miami earlier this month, executives from several midsize providers told the audience there is room for boutique players who provide high-touch service.
“There are always going to be customers who have their guy, who don’t want an institutional solution,” noted Anthony Tivnan, president of Magellan Jets.
New Jet Card Players
There will also be new players. Less than half of the 30 largest U.S. operators currently have fixed-rate, guaranteed availability jet cards, with several being recent additions.
FlyExclusive launched its first jet card program in 2020. KKR-backed Jet Edge, which is adding 27 large and super-midsize jets by year’s end, debuted its Reserve membership featuring highly discounted transcontinental rates earlier this year. It already racked up over $100 million in sales.
More than ever, the devil is in the details. With Jet Edge, its fixed rates and discounts are as available. That means if they have a plane when you call, you get the fixed price. It’s ideal if you are flexible, can book ahead, and can avoid high-demand days. Not everyone can.
One of the biggest mistakes I see jet card buyers making is following the lead of their friends. Most users have different flying needs, so what works well for your buddy could be less than optimal for you.
Next Generation Jet Cards
Some in the industry think sellers may cap memberships to better align with how much capacity is available. In other words, you may see programs open and shut as jet availability allows, a golf club type model.
It’s a new twist, but keep in mind, until June, finding jets was never an issue, and if something went wrong with the first aircraft, finding a replacement was a couple calls away. These days it may take over 50 calls to find a recovery aircraft.
Expect more operators to go direct to the consumer. In other words, there is a good chance there will be more jet cards to chose from.
With demand for private flights continuing to break records, operators are no longer satisfied just wholesaling through brokers and other operators that use them to supplement their fleets.
“In the industry, we are a brand, and we fly for all the jet card companies you know, but nobody knows us,” one large operator that is planning to launch a card program told me.
The timing of these new entrants is unsure. Right now, they can virtually name their price to other operators and brokers who have sold fixed-rate jet cards and need to fulfill the flights.
If their prices are too high for that segment, they can just quote the on-demand market.
One CEO noted yields for large-cabin jets haven’t meaningfully increased in more than a decade.
Other operators say the rate increases you are seeing and paying isn’t gouging. Operating costs are spiking. Compensation for pilots is going up. With more flight hours, maintenance expenses are rising, and operators are finding their fleets on the ground more often, not earning revenues, because repairs take longer.
One thing jet card buyers learned in recent months is providers are willing to change terms mid-stream. Some customers are upset. However, so far, most seem to understand.
More jet card users are buying into a second program to broaden their options. If one provider can’t fulfill their flight request, maybe company B can. Others are looking at fractional shares—more on that in an upcoming post.
For the time being, the most important lesson is that details matter. Jet card contracts can run over 30 pages, and all of that fine print governs the rules you will be flying under.
My best piece of advice if you don’t have a solid idea of where you will be flying, wait.
A program that works well for your neighbor who has a home in Palm Springs may not be a good option for Los Cabos or Calgary. A program that offers the lowest prices for flights from New York to San Francisco could be among the most expensive from New York to Nantucket.
If you need to fly on short notice, expect higher rates. On the other hand, you may see cards with seven-day or even 30-day call-outs and swaths of blackout dates, designed to appeal to flyers who are flexible and can plan.