New Access Routes to the HondaJet

You’d expect an aircraft boasting best-in-class sales to be a charter fleet favorite. But access to the HA-420 HondaJet has been scarce, though the model, which entered service in 2015, has been the bestselling light jet for each of the last five years, according to the General Aircraft Manufacturers Association. Even after some recent additions, only about 25 of the approximately 200 in-service composite fuselage twinjets are available for charter in the U.S., according to the Air Charter Guide. 

True, light jets have traditionally been the least available category of lift in the charter world, due in part to the low profit margins that industry professionals have long maintained small-cabin platforms provide for charter management operators. Nonetheless, the number of available HondaJets looks small compared with the more than 100 Embraer Phenom 300/300E, 100 Learjet 35A, and 125 Cessna Citation CJ3/3+ light jets in the charter fleet tracked by the lift guide.

New Providers Feature the HondaJet

A trio of providers is now working to fill that void, offering the HA-420 through fractional, membership, and on-demand access programs. Those providers account for about half of HondaJets now listed on the charter rolls. 

The first such provider was Jet It, which was launched in 2018 in Greensboro, North Carolina, home of the HondaJet factory, by two former HondaJet sales representatives; the others, Volato and Jet Token, began operating in the second half of last year.

The advent of these programs should be good news not only for HondaJet aficionados but for all business jet travelers in this demand-stretched market, as they promise an expanded lift pool and more right-sizing and efficiency in overall fleet utilization. Also, with the lower buy-in and per-hour access costs of a light jet versus larger models that long-established programs feature, the HondaJet programs may appeal to customers who are more concerned about their limited budgets than with acquiring a particular brand of jet. (The HondaJet Elite S model, introduced last year, has a base price of $5.4 million.) 

The innovative platforms that the two newest entrants offer aren’t confined to the advanced Honda aircraft they feature. Both Volato and Jet Token also bring novel policies and ownership structures to the access space, illustrating the continuing evolution of the fractional, membership, and charter markets. 

Due Diligence Is Important

But such advances also serve as reminders of the importance of due diligence in selecting any lift provider—particularly in an overheated market like today’s—and that program details and written contracts warrant as much attention as the aircraft you’ll be flying aboard. 

To be sure, the HA-420—whose distinctive Over-The-Wing Engine Mounts improve performance and reduce cabin noise—merits a starring role in an access plan. The aircraft features the highest maximum operating altitude (43,000 feet), cruise speed (422 knots), and cabin space in its class, plus such amenities as a galley and a private lavatory with a flush toilet, which are typically found only on larger jets. 

HondaJet hopes that the expanding access will boost orders, as well. 

“We believe the more people that experience this groundbreaking product the better,” said corporate communications manager Kie Nagasawa. “Referral is a primary source of new sales opportunities.”

The three HondaJet offerings aren’t in direct competition, with customer choice dictated by geography more than program features: the Atlanta-headquartered Volato primarily serves the East Coast at present, while Jet Token operates in the western U.S. Jet It is East Coast focused and has one jet in Canada, while sister company JetClub offers HondaJet shares in Europe. 

The programs’ features do vary significantly, however. Jet It’s fractional ownership plan is days-based. (That’s still a novelty in the access world, though Executive Airshare operates a days-based fractional program, as does Flexjet for some large-cabin models.) In contrast, Volato’s and Jet Token’s fractional, membership, and on-demand access plans are hours-based (though Jet Token does offer one day-based membership option). 

Volato’s Fractional-ownership Plan

With some six jets in its fleet and 18 on order, Volato’s fractional ownership plan is based on the industry-standard 800 occupied hours per year, with a 1/16^th (50 hours) minimum share costing about $350,000. 

One big Volato innovation: a revenue-sharing plan that returns a percentage of fleet income to owners, “regardless of whether those revenue hours are [flown] for charter or for owner usage,” says CEO Matt Liotta, whose background is in management and technology. Payouts, based on share size, would amount to $50,000 annually for a 1/16^th share at the 800-hour occupancy mark. 

Other noteworthy features: owners “can fly as many or as few hours as they want, regardless of share size,” Liotta says; there’s no markup on fuel or other costs, and no taxi-time charges, “just actual flight time—wheels up to wheels down.” Access is guaranteed, and for supplemental lift, “We guarantee the same or better aircraft,” Liotta says. 

Another key distinction in the Volato fractional plan: rather than giving owners title to a share of an actual aircraft, as traditional fractional programs do, this plan provides them with an equivalent percentage of shares in an LLC that owns the individual aircraft.

Liotta says the LLC ownership arrangement simplifies aircraft management and that it may provide the same depreciation tax benefits traditional fractional structures allow. But he adds, “I’m no tax person and I’m certainly not a lawyer, so I can’t make definitive statements about that.”

This column always advises readers to have qualified aviation tax and legal professionals vet contracts prior to signing, regardless of access program or type. That would apply especially to a program whose sponsor has not had it so vetted, and/or is founded on a new, untested structure.

In this case, among questions beyond tax implications that prospective customers should seek to answer definitively: What is the relationship between the value of the LLC shares and the equivalent aircraft shares, and what will affect the difference going forward? Who manages the LLC and what say do owners have in its decisions? How will disagreements among owners, and payment issues within the LLC, be resolved? What obligations do the individual entities that manage Volato’s fractional, charter, and operations branches have to owners? In the event of program failure, what would owners be left with?

Jet Token’s ‘Buy and Fly’ Offerings

Las Vegas–based Jet Token also offers fractional ownership, membership access, and on-demand charter programs. It sells fractional shares in five equal stakes (75 hours per year with a five-year term for a $1.3 million buy-in); and memberships variously provide 25-hour, 50-hour, and 10-day access. Charter management firm Cirrus Aviation, which is also based in Las Vegas and was founded in 2005, operates the aircraft.

One program feature that’s especially appealing in today’s high-demand market: “It’s a true buy-and-fly situation—no waitlists at this time,” says Jet Token founder Mike Winston, a financial analyst.

But similarly to Volato, Jet Token sells some buyers shares in a Special Purpose Vehicle (SPV) that owns the aircraft, rather than shares in the aircraft itself, and it introduces several innovations of its own. These include its foundation as an online charter booking platform, crowd-sourced funding, and cryptocurrency-linked growth plans. It also offers a financing option for fractional-share purchases: as an alternative to putting up any funds, prospective owners can buy a 1/5^th share (via an SPV) in a new HondaJet for an entry price of $278,000, which Jet Token will finance, says Winston.

Jet Token’s core business is a booking platform that will “supercharge the $200 billion private jet industry by putting control back in the hands of the traveler,” according to its Start Engine crowdfunding site, and it hopes to issue “jet tokens” redeemable for flight time through its proposed blockchain network. But first, Jet Token is seeking “clarification of security law” from the SEC that would allow it to “build the supporting network and issue the related tokens,” says Winston. “If not [approved], we’ll continue to focus on planes, pilots, and passengers.”

Meanwhile, Jet Token has raised more than $14 million from over 30,000 investors who now own roughly one-third of the company, Winston says. Part of the funds covered deposits on the two HA-420s delivered in 2021 and the two expected this year. But while it has reserved a NASDAQ ticker (PJ), Jet Token remains privately owned and doesn’t disclose financials, Winston adds.

The questions that Volato’s LLC ownership structure presents to potential customers apply here as well, as do issues concerning the respective rights and stakes of aircraft shareowners versus “investors” who own a crowd-sourced piece of the company. Prospective owners should also learn about and consider the potential impacts of the awaited SEC cryptocurrency decision, operationally, and on SPV shares’ values. Additionally, with its limited number of HondaJets and booking platform foundation, flyers considering membership plans should satisfy themselves regarding their level of access to Jet Token’s HondaJets versus flights on non-fleet supplement lift, and associated costs.

Jet It’s Day-based Five-year Shares

Jet It markets five-year-term shares from 1/10^th (25 days of access per year) to one-half (130 days) and offers a guaranteed buy-back at 50 percent of the buy-in cost after three years in the program. Jet It also provides a pilot transition program (the Red Jet squadron) that trains qualified owners to fly their own HondaJets, which are certified for single-pilot operations.

Yet Jet It, which at four years old qualifies as the elder statesman in the HondaJet access space, can also provide a case in point in the “gotchas,” big and small, that proper due diligence seeks to avoid. In April, Jet It CEO Glenn Gonzalez informed shareowners that the company had neglected to establish a policy on fuel surcharges. 

“We have absorbed the higher costs for months, but that is no longer a viable option,” he wrote. “We now must pass a fraction of this cost increase along.” Henceforth, HondaJet owners will pay an extra $250 per flight hour in the HondaJet to cover the cost.