Jet Cards

Buyers' Guide » 2008
“The jet card is like buying wine by the glass. If all you want is a glass, i
Monday, January 7, 2008 - 4:00am

Tired of the hassles of commercial air travel-or perhaps of the responsibilities of owning an aircraft? Maybe it's time to play the jet card.

Jet cards provide guaranteed access to flight time aboard private aircraft without the "deadhead" or repositioning fees associated with charter, and without the huge upfront investment or long-term commitment that go with jet ownership.

"The jet card is like buying wine by the glass," said Pat Gallagher, vice president of membership and partnership sales at Flight Options, a provider of jet card, fractional and aircraft leasing programs. "If all you want is a glass, it's more expensive [per ounce] and the choices are not as broad as if you bought a bottle, but the commitment is far less."

Jet cards were created to serve low-time users of private jets, generally those needing 25 to 50 flight hours per year. If you fly less, the reasoning goes, you can charter, and if you fly somewhat more, you can buy a fractional share. If you fly in excess of 200 hours per year, you can consider whole ownership.

These assumptions reflect the relative costs of each access solution for the hours flown. But buyers have proven unpredictable in their card use. Some fly more than 100 hours a year, perfectly content to avoid any kind of ownership plan. Meanwhile, many aircraft owners-whole and fractional-buy jet cards for supplemental lift. For example, they may want occasional access to a different aircraft type for their travel needs. And some former owners have reportedly sold their aircraft in favor of a jet card, choosing not to keep capital tied up in a hard asset.

"There can be a strong argument that a jet card provides the ultimate financial flexibility," said Steven Hankin, CEO of Sentient Flight Group, whose jet card offers access to aircraft ranging from the Cessna Citation CJ2 to a Gulfstream G550.

Since jet cards were introduced in the late 1990s, dozens of companies, including the major fractional providers, have developed them. Most share a variety of basic features, but card programs also have some individualized frills and rules. So before deciding whether a jet card is right for you, it makes sense to investigate the pros and cons of the various jet card offerings.

Jet cards basically work like debit cards: Flight time is charged against money deposited in the program by the cardholder. The cards come in two basic types: One provides access to a fleet of aircraft, from which any type can be selected on a flight-by-flight basis. These cards are sold in dollar denominations, with $100,000 the typical minimum. The number of hours you can fly depends on the type (and hourly cost) of aircraft used.

The other jet card model provides for use of a particular type of aircraft for a specified amount of time. Twenty-five hours is typically the minimum, and the price of the card is based on the type of aircraft selected.

Whether you're buying jet access by the dollar or the hour, be prepared to ask lots of questions, and consider the following:

The fleet. The diversity of makes and models of business jets means there's one suited to just about any mission. But different card programs offer different fleets. You have to determine whether a program offers an aircraft suited to your needs. Perhaps you want to fly only on the newest aircraft, or a specific type of aircraft. Or maybe you're willing to use an older airplane for a lower cost as long as it's the right size. All this makes the aircraft available in the fleet a major consideration in selecting a card program.

Program flexibility. As noted earlier, some card programs give you access to one make and model aircraft or one size category, while others provide access to a wide fleet. But within these programs, the degree of flexibility varies. Some programs tied to a specific aircraft model allow you to use a larger or smaller one or type-called an exchange-for a fee. Others offer exchanges only on an as-available basis. Some model-specific programs let you split time between two models; others permit simultaneous use of more than one aircraft. You should consider how much flexibility you'll need to cover your typical travel requirements.

Operational control. The consistency of a card program's service relates directly to the control the company has over its fleet. Some operators, particularly those that also provide fractional-ownership programs, own or manage the majority of airplanes they use. These operators can control the quality of their fleets, crews and scheduling better than card programs run by brokers, who use a network of independently owned aircraft. The degree of control over independently owned aircraft also varies among card programs. Thus, for example, the experience of traveling on the popular Hawker 900XP between two points could vary substantially, depending on the card company providing the service. "This is not a business people should look at as a commodity," advised Ken Austin, executive vice president and chief marketing and business development officer of Marquis Jet, which uses the NetJets fractional fleet to serve its card customers.

Costs. Some jet cards offer discount programs that can substantially lower your costs. As we've noted, some have two-tier fleets, enabling you to choose between newer and older aircraft on a per-flight basis. In addition, some programs offer off-peak pricing that lowers hourly cost or reduces the hours charged for flights at low-demand times; lower rates for customers who agree in advance not to use aircraft during high-demand periods; and discounts for round trips, as these reduce the empty-leg flights company aircraft have to make.

"There are groups of people that want standardization and are willing to pay more for an airplane," noted Michael Green of Delta AirElite, which has a two-tier fleet in its card offering. "There is another group of people who say, 'If it's safe and reliable, I don't care if it's Coke today and Pepsi tomorrow.' There's always room for a standardized, type-specific product and always room for a safe, reliable, size- instead of type-specific program."

A host of other considerations will enter into the final decision. Some providers offer unusual perks (Marquis provides free ground transportation to the Mayo Clinic, for example). Other issues include the availability of online scheduling, ground-handling fees and fuel-surcharge policies. And many programs have one- or two-hour minimum flight times, a consideration for people who plan to fly mostly short hops.

Finally, you should consider the history of the company and its management. "There are quite a few programs out there, and every day there's another added to the list," said Todd Johnson, national sales director at Bombardier Skyjet. "What we see driving [buying] decisions is where [customers] feel comfortable and have trust."

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