““[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.’” ”
Playing the jet card
Don't leave home without it-not if you want simple, guaranteed access to a business jet at a reasonable hourly rate. That's the pitch that has driven the rapid growth of jet card programs. Almost a dozen national companies, including the major fractional and charter fleet providers, now offer these cards. Numerous smaller charter companies also provide jet cards.
"The jet card is popular because it's easy to understand," said Steven O'Neill, CEO of CitationShares, provider of the Vector Jet Card.
Yes, the concept is simple. But the programs have become more complex as providers have worked to differentiate their card plans and add benefits to attract new clients. For example, 25-hour cards used to be the minimum denomination. Now you can buy a jet card for as few as 10 hours of flight time. Such changes mean that anyone considering a jet card needs to know how to tell the programs apart. But before getting to the fine points, let's review Jet Cards 101.
Think of a jet card as a debit card for private air transportation. You deposit a set amount of money for a specified number of flight hours, and as you use them, your balance is adjusted accordingly. (You don't have to physically present a jet card; the pilot won't ask for it to run it through a card reader before firing up the engines.)
Unlike fractional jet ownership programs, jet cards require no aircraft purchase. And no empty-leg charges are applied, as they typically are with charter. Jet cards also guarantee an aircraft-unlike block charter, where customers get a discount for buying flight time in bulk and are out of luck if the provider's fleet is fully booked. Simply put, cards deliver the convenience and consistency of fractional ownership with a smaller capital outlay and no ownership commitment. But these benefits come at a price. Per-hour jet card rates are higher than either fractional or round-trip charter rates.
When they were introduced at the end of the last decade, jet cards were aimed primarily at customers who would fly fewer than 50 hours per year-an amount of flight time equivalent to a one-sixteenth fractional share, the smallest ownership stake many fractional companies offer. But since then, cards have proven popular with a much wider range of business jet travelers.
"There used to be traditional cutoff points in the market that said if you fly only a few hours [per year], use charter; the next increment, use a jet card; next, go fractional; then buy an aircraft," explained Steve Hankin, president and COO of Sentient, one of the major card programs. "That isn't as appropriate as it was. Today, people have multiple [aircraft access] solutions because each provides different capabilities."
Michael Green, president and CEO of Delta Air Elite, agreed. "We're getting people who are exiting fractional programs, people who are participating in fractional programs but need supplemental lift and a lot of aircraft owners that need more than one airplane," he said. "We're also getting people who are new to traveling on a business jet. It's a great test drive for somebody who's not sure what it's all about."
Jet cards are even becoming stocking stuffers among the affluent. "More and more companies, around bonus season, are giving jet cards to employees," said Randy Brandoff, vice president of marketing for Marquis Jets, whose card program uses the NetJets fleet. "And they're writing jet cards into retirement packages."
Finding Your Own Card Solution
Is there room for a jet card in your wallet? To answer that question, you first must ask yourself some others: Where will you be flying and how much? How many people will be flying with you? Will you need access to more than one class of aircraft? Would another travel solution make more economic or practical sense for you?
The major economic advantage of jet cards comes from the one-way pricing and the lack of direct charges for repositioning the aircraft. All members essentially share these unoccupied flight time costs. So, a jet card makes more sense if you usually fly one-way trips great distances than if you make frequent round trips. In the latter case, charter is likely a more cost-effective solution-even by comparison with card programs that offer round-trip discounts.
If your travel needs point you in the direction of a jet card, the next step is to identify the card program best suited to you. The aircraft in the fleet, the price structure, the availability of discount plans and numerous other variables give you wide latitude. Investigate the following areas:
The fleet. Almost all card programs offer light, mid-size and large-cabin airplanes, but the models vary. Make sure the aircraft fit your needs. For example, mid-size jets can't all carry the same amount of luggage, or get in and out of the same length runways. Some programs emphasize the modernity of their jets while others focus on affordability.
Bombardier Flexjet, which offers both fractional and card programs, sees the jet card market in two segments, according to Sylvain Levesque, vice president of marketing and administration. "Some [customers] trade quality of service and consistency for price, and a clear segment is looking for the highest level of service," she said.
Flexibility. Will you need more than one model or category of aircraft, or more than one aircraft at a time? In most programs, the cost of a card is pegged to the category or type of aircraft you sign up to use. But programs differ in their policies on access to the fleet. Some limit you to the type of aircraft you sign up for. Others allow using a larger or smaller aircraft for a given flight for a fee. Still others will allow an exchange only on an as-available basis, and some allow you to choose an aircraft on a flight-by-flight basis with no fee. If you anticipate needing two or more airplanes at the same time, be sure to check policies regarding simultaneous use.
Minimum flight times. Some programs have minimum flight times-one or two hours, for example. Make sure the minimums and your missions match. A flight from New York to Boston, for example, takes less than one hour. You don't want to join a program and learn you're being debited for flight time you're not using. (Make sure response time-how quickly a flight can be arranged- fits your needs, as well.)
Discounts, deals and hidden charges. Several programs offer discount pricing plans for flights during off-peak hours, for round trips or for customers who are willing to forgo travel on high-demand days. Find out about the pricing plans at any program you're considering.
Also, while jet cards are sold as all-inclusive, additional fees are often levied for such things as fuel, overnight crew stays, catering, landing, taxi time, ground holds and repositioning outside the U.S. Programs treat these costs differently. Make sure you factor a card program's policies on such fees into your decision.
Operational control. You should know who has operational control of the airplane. Does the card program use brokered aircraft or does it own and operate its fleet? Who's responsible if service breaks down? What standards does the card provider set for its aircraft and crews?
A jet card can provide substantial benefits, as the growth of these programs suggests. But researching and selecting a program that best suits your needs can be labor intensive. Seek help from a consultant, accountant or the staffs at the card programs if you need it. If you want to get into the card game, that's how to make sure you're holding a winning hand.
Viewing this report requires Adobe Reader be installed on your device. If it's not currently installed, click here to download.