Is Democratization Of Private Jets Dead?

DayJet RIP. Jumpjet RIP. BlackJet RIP. JetSmarter RIP. Rise RIP. SetJet RIP. Everyone wants the ease of flying privately, avoiding congested terminals, showing up minutes before departure, having comfortable seats, being out of the airport and on your way minutes after you land, yet paying the price like first or business class on the scheduled airlines. Investor decks promising to democratize private aviation have attracted billions of dollars from private equity, boldface names, and large scheduled airlines. Yet so far, access to the private skies has yet to reach down to the single-digit millionaires and below in a widescale way that’s proven commercially sustainable.

Looking back over the past four decades, the industry has seen big leaps in making itself more accessible. NetJets brought fractional ownership to private aviation. It costs millions of dollars but opened private jet ownership to a wider market than having to foot the bill for an entire airplane. PlaneSense did the same with turboprops, taking the NetJets shared ownership model and applying it to the Pilatus PC-12. Sentient Jet and Marquis Jet Partners followed with jet cards, targeting flyers willing to spend $100,000 per year for private flights, but not necessarily millions.

However, the jury is still out on whether entry-level HNWs and those inching towards entry into the top 1% can fly like their wealthier double-digit millionaire neighbors instead of waiting in line like the rest of us.

In February of 2021, before its SPAC IPO, the Wheels Up Investor Day presentation highlighted the market potential of expanding access. It noted that there were one million individuals with a net worth of $10 million or more, the traditional target of private aviation flight providers who sell full aircraft charters and jet cards. Beyond that, there were 1.9 million individuals worth $5 million and $10 million. And then there were the 17.9 million millionaires with a net worth of under $5 million. Tapping into the single-digit millionaires would expand the addressable market for private flight providers by a multiple of 20.

The presentation also pointed out that private jets sit idle 97% of the time. Vinayak Hegde, a former Amazon and Airbnb executive who served briefly in executive positions with Wheels Up, explained that, like the home-sharing service, creating a sharing economy for private aviation would be a long road. He believed private aviation offered a similar opportunity to Airbnb’s journey from renting couches to mansions. He envisioned jet owners who were reticent to make their aircraft available to renters noticing their cohorts tapping their app between holes on the golf course, earning tens of thousands of dollars.

Like Uber drivers and homeowners, jet owners could see how potential charter customers were rated based on past trips and decline those who behaved poorly. Of course, the stakes in private aviation are much higher. A broken tray table can cost thousands of dollars to replace, and damage to an airplane in the highly regulated charter industry could ground a jet for days or weeks.

However, he believed eventually, jet owners (who are the source of many charter airplanes) would follow the home-sharing curve, making more private aircraft available more of the time. That would provide the capacity for more flyers who were willing to share flights to cut costs. In fact, Wheels Up introduced an entry-level membership called Connect. Its purpose was to allow those single-digit millionaires to buy unused seats from its regular members who were paying $5,000 to $10,000 per hour to fly. The regular customers would save money and fly more, creating more opportunities for shared flights. The jet owners would rack up more cash from charter rentals, encouraging them to make their airplanes available more often. Over a beer at the 19th hole, they would encourage their friends to follow along, showing them the easy money. The more jet owners who made their aircraft available for charter, the fewer airplanes flight providers would have to buy or lease, cutting the cost of scaling their businesses. It was a virtuous circle.

At least on the surface, the theory made sense then and still does. Recent research by Private Jet Card Comparisons with subscribers who own jets and fractional shares and spend over $275,000 annually on jet cards found that 34.5% would fly via sharing and by-the-seat concepts to save money. More than 20% say they already share on a casual basis with friends headed in the same direction. Over 88% switch between private flights and scheduled airlines, indicating an appetite for a service that fills the gap.

Still, less than 10% of survey respondents say they used a formal by-the-seat or jet-sharing service in the past 12 months, a number that’s held constant over the past three years. While the jet sharing and by-the-seat providers may not give you a jet all to yourself, they use FBOs and private terminals, eliminating airport crowds and long lines, including for security.

Listening to the pitches from providers of services hawking democratization can be compelling. They identify the problem and then claim to have invented the solution.

“There are countless travelers frustrated by their current flying experience and would like to upgrade but haven’t considered the possibility because it is price prohibitive. With the introduction of Jumpjet, we believe we can change the way millions of people travel and bring luxury and value together in a new and truly positive way,” its Founder Will Ashcroft told Corporate Jet Investor in October 2012 ahead of its relaunch the following month. The 2007 start-up went on hiatus in 2008 as the financial crisis unfolded. The New York Times’ T Magazine even featured a $2,350 monthly membership alongside a Hermes notebook and Brunello Cucinelli shoes in its list of recommended holiday gifts.

A 2014 Facebook post teased, “How does flying roundtrip from Boston to West Palm Beach (or vice versa) on a private jet for $450 sound? Or San Diego to Seattle and back on a private jet for $450? It’s now true and available via our perks at our Crowdfunding campaign. Come check out the other unbelievable deals.” One respondent noted, “It’ll never work. The model is not sustainable, and you guys are nothing more than charter brokers.”

Ashcroft finally threw in the towel in 2016 but says the interest is there. When he started the first time, he says an appearance on a cable news show drove over 70,000 visitors to his website. Before the 2008 hiatus, he had 1,850 paying members; the second time, there were 1,900 members.

Ashcroft claims to be the inventor of the shared private jet market, with his first flight in May 2007, about five months ahead of DayJet, which was using the Eclipse very light jet as an air taxi. The Jumpjet model was based on chartering aircraft from operators. While both companies failed, Ashcroft believes owning the airplanes is the only way to make it work.

He says the biggest hurdle was educating customers. They loved the price point. They enjoyed flying on a Gulfstream with just a couple of other people, even if they didn’t know them. But when it came to telling them they had to leave at nine in the morning instead of eleven o’clock, they balked.

BlackJet, which shuttered in 2016, also promised seats on private jets at prices competitive to business class on the airlines. According to Business Insider, it blamed the media for its demise. Its CEO Dean Rotchin said, “In the last few days, there was some inaccurate bad press that stunted membership sales, a critical team member stepped down unexpectedly, near-term and longer-term financing opportunities were delayed, and it became impossible to continue.” Backers included Jay-Z, Ashton Kutcher, and Uber co-founder Garrett Camp, who invested in Aero, a current democratization play.

The best-known of the names that are no longer around was JetSmarter. It was able to attain a billion-dollar valuation. For under $10,000 per year, members could take as many free flights on private jets as they wanted, sometimes just a seat, other times the entire aircraft flying what is referred to as an empty leg. That’s when a private jet drops off the regular passengers and must position to pick up the next paying passengers or return to its base. Between one-third and half of charter aircraft fly on that basis, providing fertile ground for entrepreneurs to concoct their business plans.

According to an investor presentation, by 2016, JetSmarter had amassed 7,627 members. However, $44 million of its $123 million in revenues came from traditional full private jet charters, with $72 million from annual membership fees. Its plans to reach profitability forecast that members would begin paying for their seats on shuttle flights, which stood at just $6 million back then. Its projections called for those per seat sales to grow to over $1 billion by 2021, but the shift was met with a slew of lawsuits from members who claimed they were promised free seats forever. Vista Global bought the company and merged it into its XO brokerage using its technology for its shared flights. JetSmarter settled claims via class action arbitration.

A spokesperson for Vista Global says, “We’ve been ahead of the market in pioneering this offering and developing, with XO, the technology to make it possible. While uptake across the broader market may still seem limited compared with other ways to fly, we believe in the value this product can provide and are exploring ways to enhance it. Private members’ communities, for instance, have shown significant interest in fine-tuning this solution, and we’re actively looking into how to better serve their needs. The true success of this product lies in offering high flexibility and the ability to share the cabin with people you choose—this is the key criteria that drive its continued relevance and appeal as part of the wide mix of options business aviation can offer.”

Another unfulfilled promise was Surf Air. It offered a subscription membership, where you paid a monthly fee of $1,950 to $2,950 and flew as many flights as you wanted on its eight-seat version of the PC-12.

Its route network spread throughout California. In 2017, it bought Rise, offering a similar network of scheduled flights from private terminals in Texas.

Its Founder and CEO Sudhin Shahani said at the time, “Before Surf Air, professionals throughout California wasted hours traveling through commercial airports, waiting in security lines, and stealing precious time from business and family. Today, the all-you-can-fly membership model is here to stay by taking frequent flyers off commercial airlines across major short-haul business cities and onto an easier way to travel.”

Immediately after the acquisition, Surf Air and Rise operated 445 weekly flights to 17 destinations. They planned to add to Las Vegas, Bentonville, Midland, New Orleans, Scottsdale, Taos, Cabo San Lucas, Aspen, and Sun Valley within 18 months. It never happened, although the company is still around and has pivoted to green aviation, staking its future on electric and hybrid aircraft. The former Surf Air network is down to just a couple of routes.

Wheels Up, which had a near brush with bankruptcy last year before Delta Air Lines led a $500 million investment, has now put democratization to the side and is focused on full aircraft charters via memberships and ad hoc. Chief Marketing Officer Kristen Lauria says, “As a brand, we’re focusing on delivering our customers the best possible service globally through the use of our expansive owned and chartered fleet. This is where we see the most demand, but we do technically offer the ability for shared flights for members.”

For now, JSX, which has drawn investments from JetBlue and Qatar Airways, has become the clear leader in the by-the-seat segment. Its route network spans from California to Texas and up and down the East Coast between the New York area and South Florida. Readers of Travel + Leisure voted it the best domestic airline earlier this year. In its most recent public statements about profitability last year, executives said it was on the verge of breakeven. Seat prices typically range between $300 and $1,000.

However, JSX, Aero, which offers a similar scheduled by-the-seat model and retrenched from London and Dallas to focus on Los Angeles, and XO now face legal challenges and possible new regulatory hurdles. In June, the Federal Aviation Administration said it was moving forward to change the rules under which the trio operate. While that could take up to three years, the by-the-seat operators have faced legal challenges at airports in Westchester County, Austin, Texas, and Orange County, California, seeking to move their flights to the main terminals where they would lose their competitive advantage.

An email by JSX CEO Alex Wilcox to customers urging them to oppose efforts sending them back to snaking lines and crowded terminals said in part, “The truth is that two huge airlines – American and Southwest – and their labor union leaders – have been lobbying the FAA, TSA, and elected officials in Washington D.C. with misinformation and unsubstantiated safety claims in a brazen attempt to regulate JSX out of business.” The FAA said it received over 50,000 comments.

For now, JSX and Aero are continuing to add routes. The former starts service to Naples, Florida, this winter, an airport without scheduled airline service, and Palm Beach from Morristown, New Jersey, another airport without scheduled airline flights. Aero has added Napa, Palm Springs, and Las Vegas flights from Van Nuys, a Los Angeles airport with no airline service but one of the busiest private aviation airports in the country.

Tradewind Aviation offers by-the-seat scheduled flights seasonally in the Caribbean during the winter and in the northeastern U.S. during the summer. It is now adding flights between Palm Beach and the Bahamas. Conde Nast Traveler readers’ pick as their favorite domestic airline uses eight-seat turboprops and won’t be impacted by possible regulatory changes. Still, the shared flights, which start around $200 per seat, are an adjunct to its principal business of full aircraft charters with limited routes.

Despite the outsized amount of media buzz, empty-leg memberships still need to find their place. Vaunt, the most recent, was an attempt by 2021 start-up Volato. It allows members to fly free on those repositioning flights for an annual $950 membership. However, its future is in doubt after Volato exited its primary business as an operator selling fractional shares and jet cards on a fleet of two dozen HondaJet VLJs.

Sure, there is a steady flow of start-ups and restarts that put out press releases claiming to have found a way to democratize private jet access. They, too, use the decades-old pitch they have discovered the magic formula of making private flights affordable and rescuing you from those snaking airport lines. Most sound good on the surface. Fully exposed, they don’t track with the reality of the fragmented market of charter operators – over 600 in the U.S. operate private jets, or the fact there is still a minimal window into what aircraft are available when and where, or how to price the flights without human intervention, or that operating airplanes is an expensive and capital intensive business subject to all sorts of disruptions from weather to mechanicals.

Ashcroft expects you will continue reading about new apps, marketplaces, and operators promising cheap luxury private jet flights. He says, “We had the media on our side. They knew their readers and viewers were thirsty for a better way to fly. It creates views and clicks.”

But customers wanted it all, he says. “When discussing democratizing private aviation, you have to give up something. If you are going to get private jet travel at a discount, you have to give up something, but even though the customer who was getting a $28,000 flight for $4,000, they had high expectations.”

For Jumpjet, a broker, the cost of a replacement charter aircraft when a mechanical issue occurred or the operator canceled a flight was overwhelming. That was one of many challenges. While there were plenty of members, they didn’t want to fly at the same time, so there were too many flights with ten seats and one or two customers. The math doesn’t work that way. And like many start-ups, the company was undercapitalized.

However, not everyone believes the next generation of democratization will involve selling empty legs at a discount, crowdsourcing, or by-the-seat scheduled services.

William Herp was a pioneer in the early 2000s, like DayJet, using the Eclipse VLJ but selling whole aircraft charters instead of seats. He says there needed to be more of a difference in cost and what could be charged between the very light jets and run-of-the-mill light jets offered on the charter market. Today, Linear Air has moved from operator to broker, and he sees the next frontier for democratizing private flights around piston aircraft.

According to his figures, over 1,300 piston aircraft are available for charter in the Continental U.S. While they may only be ideal for two or three passengers and have limited baggage space and range, they bridge the gap between drives that take five or six hours, and the cost of chartering a jet or turboprop. “In September, our average piston prop charter cost was $4,419, while the average turbine trip was $17,070,” he says.

He believes that as charter operators deal with falling demand, race-to-the-bottom pricing, and higher costs for pilots, maintenance techs, ground services, and everything else, companies have been forced to curtail investing in developmental segments like jet-sharing or by-the-seat services. Before Covid, Wheels Up offered dozens of by-the-seat flights from big cities to college football venues on Saturdays in the Fall. Blade has found success in the helicopter and organ transplant market, but last year, it exited the by-the-seat private jet market, where it operated flights between New York and Miami. Jet Linx, a large aircraft management company and charter operator, ditched its jet sharing program.

“Everyone is cutting back on what’s losing money. The per-seat model has only been successful as a marketing pitch. From a financial perspective, they are money losers,” Herp believes. He thinks JSX and Aero have limited routes where it makes sense. Ashcroft, who is bullish on both, says it’s hard to have enough frequencies to attract business travelers, so the per seat and shared jet services must rely on leisure routes.

Herp says technology is making flying piston aircraft safer. “One of the most significant drivers of piston charter has been the decades-long improvement in equipment and systems, enabling piston props to operate as safely, statistically speaking, as turbine aircraft when operated under Part 135. Examples include GPS-based navigation, approach and ground proximity systems, autopilot functionality, and ADS-B for in-cockpit traffic avoidance and weather information.” Herp adds, “It’s much more difficult for a pilot to get into a difficult situation.”

What about New York to Los Angeles on a Gulfstream? That was the plan for SetJet, which was expected to go public via a SPAC-merger IPO last year. After several delays, it shut its doors in January. A July 2023 SEC filing showed 2,899 members who paid $99 per month and could fly on specific routes operated by large cabin private jets at between $750 and $1,550. Through the first half of last year, it lost $5.5 million on just $7 million in revenues. Like others, it simply ran out of money.

One of democratization’s biggest advocates hasn’t lost faith. Even though he has stepped away from private aviation, Kenny Dichter, who founded both Marquis Jet in 2001 and Wheels Up in 2013, is bullish. When I reached Dichter via email, he was en route to Kitty Hawk, the site of Wilbur and Orville Wright’s famous first flight. I told him my proposed headline, and he quickly emailed back, “Democratization is still in its first inning, surely not dead!”

One lesson from the history of aviation is that eventually, there will be a breakthrough, even if it takes billions of dollars in lost investments and dozens of business failures. For those magnificent men – and women – and their flying machines – and apps – who believe in making private aviation more accessible, they can take note that just over two months before that epic moment in 1903, The New York Times published an editorial predicting, “To build a flying machine would require the combined and continuous efforts of mathematicians and mechanics for one to ten million years.”

When I told Ashcroft about how the Wright Brothers defied the newspaper of record, he said, “My compliments to the folks still out there trying to do it.”