Jet Cards Exposed: Everything You Need to Know
Private jet cards can be a risky affair, and it’s never been more obvious. When the borders closed, jets were grounded and citizens were asked to shelter in place. When this happened, some jet card cardholders found themselves in an unprecedented situation. Then, as some of the larger, retail-driven private jet vendors filed for bankruptcy, taking with them millions of dollars in prepaid jet card deposits, jet card ideals were grounded alongside the jets they were attached to.
What is a jet card program?
The terms of the card range from one issuer to the next, but it basically boils down to a prepaid price for a certain amount of flight time hours. These cards are positioned in a way that looks beneficial to the consumer, but in reality, they come at a steeper price than most realize. To maintain that fixed rate, a financial risk premium is added to the cost, not as a line item, but actually rolled into the cost of the card. These rates can be found in the marketplace at any time, but a reputable charter broker can secure the same rates or better without the upfront cost of a jet card.
Jet card program providers: broker vs. operator
The risks to your safety and capital can be impacted in different ways depending on whether the issuer of the jet card is a broker or an operator. Though both issuers offer mostly the same product, there is one key difference to be aware of. An operator has a financial interest in the aircraft they manage and/or operate. They may not own the jet, but their ability to generate revenue is tied to their ability to keep the owner of that jet happy. To do that, they may prioritize the needs of the aircraft owner over an aircraft with a performance profile that is more suited to the client’s needs.
Jet cards can compromise safety
Besides a financial risk, jet cards also pose a safety-related risk. Jet card holders have no control over aircraft selection. That decision is made by the issuer. The problem with that is the issuer may not be choosing the most appropriate aircraft for the mission and will almost always select the aircraft that serves their bottom line best.
The rise and fall of one company’s jet card program
In hindsight, it’s easy to see why jet cards have been so popular. The luxury and convenience of flying in a private jet can make it more affordable for some, especially those that require frequent flights throughout the year. However, jet cards typically come with fine print that frequent fliers may skip over. The terms are often subject to peak hours, aircraft availability and other caveats. And, as recently witnessed, jet cards also come with financial risk. If you read about the recent Chapter 11 bankruptcy filing of JetSuite, you can see how jet card programs that require a deposit can be risky. In a Private Jet Card Comparisons article, it was noted that operator JetSuite had issues with breaking even, even before the recent economic upheaval. The article stated that this was caused, in part, because of the “unreliability of the planes.” Following COVID-19 travel restrictions, JetSuite clients were told the fleet was being grounded. Shortly afterwards, news arose of the bankruptcy. Now the private jet charter operator’s Chapter 11 filing confirms nearly $50 million in unused jet card deposits. To secure their 2020 travel arrangement, many companies would have paid a huge annual deposit to their air carrier. Once the travel sector collapsed, it unfortunately took some of those deposits with it.
Jet cards are more costly than advertised
Another item mentioned in the fine print is the mention of additional fees. However, these fees may not be clearly stated. For example, taxi time can roll into flight time, and cardholders may find themselves losing flight-time hours quicker than they expected. Peak travel times and holiday weekends are more costly than the average mid-week flights as well. And in some cases, priority is given to clients paying for on-demand flights, which means cardholders may lose access to certain aircraft or be forced to pay on-demand rates instead of using their jet card hours. Another common additional fee for cardholders is in relation to non-preferred fixed-base operators (FBOs). Those purchasing jet cards may be forced into using certain FBOs or faced with additional fees for using FBOs not specified in the contract. Finally, jet card holders are often faced with an expiration date. Oftentimes, a set number of hours must be purchased and used within a required timeframe. Expiration dates vary from one company to the next, but they’re usually required to be used within the year the hours are purchased.
Mitigating the jet card program risks
With private aviation on a steady incline, it’s important to thoroughly consider private aviation options before making a decision. One option that has fared well throughout the recent turmoil is on-demand charters. They’re simple and don’t come with the same risks that accompany jet card programs. With on-demand charters, the flier has the ability to pick the aircraft and operator and make an informed buying decision. On-demand charters also provide flexibility for evolving travel requirements, up-front costs with no additional fees, and superior safety standards.
Find a charter provider that aligns with your values
The simple fact is that jet cards put the customer on the opposite side of the table from the issuer. On-demand flights with full market access put private fliers in control and allow them to work with advisors that are there to solely represent the clients’ best interests, not the interests of the company. In today’s economic landscape, it’s important to select a provider that reflects your own personal values, has been in the industry long enough to weather the economic shift, always puts client safety first, and provides honest, transparent pricing. When it comes to pursuing private aviation, the buyer has more options than ever. Finding the company and purchase option that makes the most sense is easy once you know what to look for and what to avoid.