Sykes

I was on that flight as well. I'm sorry that we didn't have a chance to connect.

I fully believe that these investors believe in the dream of the company, but this is also one of my biggest sources of concern. There are plenty of reputable venture capital firms that are willing to make bets on aviation startups. I think it is probably telling that JetSmarter is relying on less traditional sources of investment. There's nothing that is inherently wrong with that ... it just makes my Spidey Sense tingle.

oenophilist

No, they shouldn't be burning money unless the shuttles are going out empty. And right now it seems like they are mostly full.

I see the shuttles as one of the most predictable business models in the JS portfolio. It is very easy to determine a) the cost of the shuttle; b) the contribution of each JS member to a shuttle; c) the utilization; etc etc. If shuttles are going out full and they are still burning money, then the business model is wrong.

But I do not believe they would sustain the shuttles if they were burning money. It is too expensive. I can imagine that if they have empty shuttles, they will discontinue or reduce them. And the model of creating a shuttle by "buying into" a shared jet is a good one. It is also pretty predictable.

KurtR

The "sophisticated" investors you mention, were invested in aviation companies that owned and operated their own aircraft - a different model for sure then the asset lite subscription based model offered by JetSmarter.

oenophilist

So is investing in an operator a better investment than in the asset-lite model?

Gabrca

One-word: Tidal 😂

Herb687

Private jets aren't Marriotts. When it comes to customer experience, asset-light just doesn't work in this business.

I said it a long time ago. Strip out all of the glossy marketing, "celebrity" endorsements, and the hype about being a technology company and JetSmarter is really nothing more than a creative new twist on an age-old business: charter brokerage.

And the core problem (from the perspective of the passenger) is that the fundamental business model of charter brokerage remains this simple:

A) Find the cheapest lift you can
B) Mark it up as much as you can


Charter brokerage has always been asset-light!

Kagehitokiri

what does JS pay for shuttle
what is maximum number of seats on shutle, at what price
(as oenophilist and others have brought up)

theyre selling transcontinental seats at $4K ?
arent they selling transatlantic seats at $4K round trip ? (earlier post)
members only get 1 seat on the shuttle ?

alwaleed is investor ? why hasnt JS asked about Four Seasons tie up ?

On Demand Shuttle idea is great idea, others have tried, think all stopped
hmm, JetEdge "up to" value may have been if JS did NOT buy max hours

Herb687, agreed. to add to what Herb687 is saying: JS is not being copied. Uber is being copied - where startups are offering the same thing, but taking less of a cut from their drivers.

oenophilist

But private jets are an underutilized asset. This makes them a good potential for an asset-light model.

oenophilist

Can you expand on this? What do you mean that sophisticated members are no longer "flying with our level"? Unless they are doing private charters, they would certainly fly shared. And if they are exclusively doing private charters, then JS wouldn't provide much value as they can cut out the middle-man or use one of the many competing charter companies.

Kagehitokiri

oenophilist, Herb687 knows what he is talking about.

there is a reason charter yachts' owners do not allow operators to charter the yacht, and then resell cabins. yachts cost up to $500m, and charter up to $5m a week plus expenses. when the economy was down, i saw 1 (only 1) charter yacht have 2 (only 2) trips to antarctica where it was done by an operator who sold individual cabins. 6 cabins, related to SOLAS. vast majority of yachts do not pay to be able to comply and take charters for more than 6 cabins / 12 passengers. so some are charging a couple million a week for 12 passengers, regardless of number of cabins the yacht has.

as elitetraveler mentioned re costs (specific examples) of repairs on private jets, i know an example from yacht interiors - $4,000 (on lower level yacht) for a small cabinet door which got dinged.

Uber is using the cars (entry price of cars is extremely low) owned by their drivers, and they now even have lease deals where drivers can get a lease they can cancel at any time. (in some cities, etc)

also, many JS members, charter customers, and owners do not want to share. the question is if and when price continues to be brought down to have more 'open' market. VLJs turned out to not really work out. turboprops and some light jets can have similar operating cost per hour. there are established operators with turboprop/piston shuttles, and airlines that use similar and or twin piston.

gold23

I have commented in this forum primarily because I REALLY wanted JS to make sense for my own membership. I've communicated directly with two separate reps from JS over the past few months. I've followed this thread, as well as other mediums providing information on the company.

What I am certain about is the following- JS continues to move the goalposts, and they are not very good about communicating that in advance. Raising the cost of entry is one thing- go for it. Changing the model countless times, and without warning, is going to have a deliterious impact. On current members as well as potential members.

I walked away from every conversation with a rep feeling slimy. It was as if I was being sold a used car. Everything was amazing, costs were virtually nothing, yada yada. Upon further research, much of it turned out to be half or three quarter truths.

So I say this....it's possible JS has a vision and is moving towards that vision at the pace they anticipated. But they're doing a horrible job laying it out, and it certainly appears as if they are making knee-jerk decisions to current business operations. They'll need a much more polished marketing and sales staff moving forward, and it wouldn't hurt to maintain membership level details for more than 48 hours....

I'll close with this.... I booked a charter a month or so back. JS was actually very competitive in price through the app. I called to follow up.... Nothing. As a non-member, I wasn't booking a $12k one way online without personal follow up- so they lost that business because I never received a call.

Kagehitokiri

its unfortunate that their sales and service model seems to be like that.
(this is a hiring, training, supervisory issue. service matters.)
perhaps some can recommend specific reps / managers via PM.

(many on FT prefer dealing with management. i quickly learned why and joined them.)

so you do not want nonmembers to promote JS. JS would disagree.
your quote also says: no one is allowed to ask former members why they quit.
and: if youre investor/employee/partners without memberships, do not post.
and: if you only charter with JS, but are not a member, do not post.

many people want JS (et al) to succeed and expand long term.
primarily because of how bad commercial airports are today.

(rather than competing with best longhaul First, unless bedrooms.)
Emirates has a private jet with 10 F suites, plus additional seats.
perhaps JS could inquire re chartering and reselling to members...
that kind of thing would get a lot of interest from spenders on FT.

Sykes

They're not equipped to compete in the private charter business. Wheels Up has been fantastically responsive to my inquiries (almost too much!), but they're going after a completely different segment of the market. JetSmarter has been very clear that their goal is to bring private jet flights to the masses.

"If we're able to charge economy prices, we think we can get people to walk away from the atrocious commercial airline experience,"
... is the quote from Business Insider: http://www.businessinsider.com/priva...-family-2015-7

People that have the money to truly fly private should really be looking elsewhere. That's not to say that there aren't some decent charter deals to be had in the app, but it's not really their core business, and frankly their sales and marketing is not ready to service that market segment anyway. It sounds like they may be looking to improve their standing there, but I doubt that they can achieve it without a dramatic change in their sales culture (which usually requires a change in leadership).

Kagehitokiri

sounds like they might not even have much in the way of charter staff

their $40K membership ($20K charter credit) was to get people to look at charters

those of us willing to do short charters at $1K/$2K/etc might be willing to pay 'more' for seats on somewhat longer flights, to avoid commercial airports. there are existing shuttles (using non-commercial terminals etc) that do not require membership.

besides JS >
i plan to watch development of paid VVIP service at LAX (tarmac transfer for commercial)
can JetSuiteX succeed and expand their service (using non-commercial terminals)
can Signature expand VIP/VVIP service beyond LGW (for commercial passengers)

Gabrca

That's shocking IMHO. If I put my details to any other charter website, I'm hounded with emails and phone calls.