““[Bill Gates] has been historically one of my best supporters…One of my favorite e-mails he ever sent me…I proposed this crazy project. And he sent back this two-line response: ‘This has got to be the craziest thing you’ve ever suggested. Please proceed.’” ”
The Xojet difference
Xojet is on a tear. Launched in January 2006 with a small staff and a few airplanes, the company now employs more than 350 people and operates 47 super-midsize business jets out of Brisbane, Calif. It credits its growth largely to deploying its fleet unconventionally to maximize efficiency and to its pricing, which is highly competitive and also transparent compared with that of many rival outfits. Even its marketing efforts depart from traditional industry practices.
Let’s start with Xojet’s fleet, which includes 14 Bombardier Challenger 300s, 26 Cessna Citation Xs and seven Hawker 800XPs made by Hawker Beechcraft. The jets have an average age of just three years, and the company claims to have been the first in its industry to equip all of its airplanes with Wi-Fi. Many private-jet companies deploy aircraft they manage for others, while Xojet, in contrast, owns or leases all of its airplanes.
The jets are painted entirely white, a conventionally perceived drawback because the color suggests unsold aircraft. Furthermore, the Xojet name is plastered across the engine covers. That’s another marketing no-no; passengers typically like folk outside the airplane to think they are flying their own jets, not just some air taxi. But customers apparently like the look, and the branded aircraft on tarmacs around the country have spread word that Xojet serves many cities.
The outfit–which TPG Capital acquired in 2009–claims that owning and leasing its fleet results in better efficiency and more consistent quality. By concentrating on just a few aircraft models, moreover, Xojet minimizes costs for crew training, insurance, parts and maintenance. It also flies its airplanes 95 to 100 hours per month–more than twice the industry average, it says–and makes relatively few repositioning flights (trips without paying passengers). All this efficient fleet utilization helps Xojet offer highly competitive pricing, according to CEO Blair LaCorte.
To help customers understand that pricing, we reviewed Xojet’s menu of six flight options, all introduced since 2009. Three of them compete with traditional charter:
Fixed-Price Charter offers set charges for flights between 22,000 U.S. city pairs, including San Francisco/Atlanta ($22,000), Los Angeles/Houston ($17,000) and Chicago/Seattle ($25,000). As with traditional charter, availability of aircraft isn’t guaranteed. What’s different is that Xojet’s prices are transparent. The published prices include ground transportation in departure and arrival cities, in-flight catering, phone calls and Wi-Fi connectivity–everything but federal excise tax.
Preferred Access allows you to cut costs for each flight by prioritizing your needs. You can pay less, for example, if you’re flexible about departure dates and times, airports and other variables. Aircraft availability isn’t guaranteed here, either, but CEO LaCorte reports that Xojet fills requests 90 percent of the time. Discounts are also available if you make a refundable deposit.
Custom Charter is a traditional charter offering and is the only Xojet product that sometimes utilizes aircraft from outside the company’s fleet. In this case, Xojet will find you an airplane to take you wherever you want to go and provide a customized quote–which, by definition, will be more than you’d pay with the Preferred Access program.
Xojet’s other offerings compete more with fractional-jet-share providers and with jet cards. Aircraft availability is guaranteed in these cases. But unlike fractional shares, these programs don’t require buying a portion of an aircraft or suffering a loss if airplane values dive hard.
Coast2Coast is for those traveling cross-country at least three times a year. The service covers more than 100 routes between East Coast and West Coast airports and costs $115,000 for 25 hours of airtime. Such flights can cost 40 percent less than with a fractional share, Xojet claims, because it’s less expensive to operate popular, long-distance routes. The company passes those savings on to clients; rival fractional-share providers typically charge the same rates regardless of route.
Elite Access lets you use Xojet’s fleet for $8,500 per flight hour, including fees, taxes and fuel. There’s a $100,000 refundable deposit; the company bills you on a per-flight basis, with a minimum charge of 1.5 hours per flight, and requires an annual 50-hour fly-time commitment. “Minimal” charges apply for canceled flights or schedule changes with less than 12 hours’ notice during non-peak days, or less than 48 hours during peak-demand days.
Jet Membership, a variation of Elite Access, offers the best Xojet market price per trip to those purchasing membership for a “low” fee. Asked what “low” means, a representative replied that the program “is highly customized” to address “when, where and how a customer prefers to fly.” Membership is for anywhere from one to five years, the hours associated with the membership don’t expire and there are no blackout days or aircraft-repositioning fees. Furthermore, you pay only for the airtime used.
Xojet’s offerings can look sweet if you want simple, competitive pricing with minimal commitments and fine print. But LaCorte admits that some consumers–particularly those who want a waiting airplane to whisk them off on a whim–may be better off with a fractional provider or full ownership. Traditional charter can make sense in other circumstances. Private-jet charges are not nearly as easy to scrutinize as airline fares. Some companies charge for every little extra, and even Xojet’s relatively straightforward deals often involve flight-hour commitments and upfront deposits. Given the amounts of money involved, it’s wise to carefully consider all the alternatives before signing on any firm’s dotted line.