Originally Posted by
WhyPrivate
PJ Paul,
Can you elaborate on the "ponzi scheme" aspect of jetsmarter?
I disagree with this company's significant terms & conditions adjustments during a membership period but don't see this as a ponzi where a swindle results in a quick profit for investors.
I have not signed up even though I was close a few times. Not being able to control my schedule isn't worth any real or perceived cost savings to me. In the past, members ranted and raved about it.. I missed that boat.
But how is this a ponzi scheme vs. an investment that didn't come to fruition yet?
I believe that's on the investors being naive enough to think that the company WOULD BE capable of capturing the empty leg market and returning a profit. It's a gamble they are taking, and they might pay dearly, or get away unscathed by selling their share to another naive investor.
Do you see any possible change in jetsmarter's business model that could turn the company into a profitable enterprise?
From my understanding, their business model was always flawed and what they were promising they'd be able to do is borderline impossible. There is really no way to capture/monetize a majority of the empty leg market like they claimed they would do. So many of the empty legs out there are repo flight from places like Midland, TX to Waco, TX. There is a very tiny market for that type of flight to begin with, so to project that you are going to monetize and profit off of flights like that is misleading.
I think the term "ponzi scheme" may not apply, I was just using the word flippantly. I do know that the execs pay themselves very well and i know that the company cannot be turning a profit with the amount of money they spend on advertising. I run a very lean private jet charter brokerage myself, and the margins in this industry are very small, so there is no way they can be turning a profit with the amount of overhead they have. I also know last year their CFO got indicted for embezzling investor money (allegedly). When there is smoke, there tends to be fire.