Jet It outlines options to fractional owners as fleet stays grounded
The 12th largest U.S. charter/fractional private jet operator, Jet It, remains grounded as questions about its finances before the shutdown increase
Jet It’s fleet of HondaJets and its Phenom 300s and Gulfstream G150s continued to stay parked on the ground today after the fractional and charter operator grounded its VLJ fleet a week ago.
Jet It owner options
CEO Glenn Gonzalez has been holding calls with owners, according to a report in Flying magazine and other sources.
One owner tells Private Jet Card Comparisons during the presentations, Jet It offered the following options:
- Be patient with us
- The airplane can go to another operator
- The planes can be sold
- Owners can contract furloughed pilots on their own, independent of Jet It
At least some owners were given estimated values for their airplanes.
Timeline
According to a timeline given to owners, “Jet It determined May 18 that out of concern for the safety of our clients and crewmembers,” it implemented “a safety stand down on the HondaJet fleet.”
It continued, “On Friday, May 19th, Jet It counsel provided Honda Aircraft Company with information regarding previous runway excursions, both documented and undocumented, along with an explanation regarding the most recent aircraft catching fire.”
The presentation, believed to have been given Wednesday, stated, “We received the first formal response yesterday stating (Honda Aircraft Company) do not agree with our decision and will provide a response to our request by (today).”
It said, “Jet It has reached out to a third-party SME in human factors, operational risk management, flight operations, braking system analysis, and runway surface conditions.”
Jet It said on Tuesday, May 23, it grounded its entire fleet “until we can understand (the) next steps from FAA and Honda Aircraft on the safety of the airplane.”
Employees have also been furloughed.
Financial issues?
Craig Fuller, CEO of Flying and a Jet It fractional owner, wrote, “During our call with Gonzales, he put the blame for the failure of Jet It entirely on the Honda Aircraft Company, claiming that HondaJet aircraft suffered from a series of runway overruns. He cited a total of 20 incidents since the HondaJet was first introduced in December 2015. He compared that to the Embraer Phenom 100, which has seen 21 runway incidents since its first delivery in 2009. “
Fuller said two owners on his call questioned Jet It attributing the grounding to safety concerns, with one owner questioning if there were financial issues as well.
Flying quoted the owner as saying, “It sounds like you are bankrupt to me.”
Asked to comment on accusations that financial problems were behind Jet It’s decision to ground its fleet, Gonzalez declined to comment.
An investor presentation (below) from 2022 showed the company expected a net loss last year of $23.2 million on $120.1 million in revenues.
Jet It financials
However, the undated correspondence suggested 2022 performance was being hampered by available capacity:
The company wrote, “HondaJet availability over the last four months has been less than 50%, greatly challenging our business. Needless to say, business operations to support 120% demand with only 50% of required inventory is extremely difficult. Therefore, the need to diversify the fleet and transition to a new platform.”
Gonzalez then went public when he blamed HondaJet’s lack of support and aircraft reliability in an email to customers to pitch the new Phenom 300 program.
Previously, in a written statement, a spokesperson for the OEM said, “Jet It’s decision to ground their HondaJet fleet was made independently by Jet It. Importantly, neither Honda Aircraft Company nor any aviation authority has recommended this grounding. Therefore, we have no comment about the decision by Jet It to ground its fleet.”
Two other HondaJet operators that offer fractional and jet card programs, Volato and Jet Token, are continuing with normal operations.
Owner vs. Wholesale Rates
Jet It fractional owners flew for as little as $1,600 per hour.
As fuel prices spiked last, some Jet It contracts apparently did not allow the operator to impose a fuel surcharge on its owners.
At the same time Jet It owners were reporting deteriorating service, charter brokers tell Private Jet Card Comparisons they were chartering HondaJets from Jet It for their clients.
Jet It was charging brokers net rates exceeding $5,000 per hour and as much as $8,000 for flights under one hour in the Northeast corridor between major airports.
The Jet It business plan allowed it to earn revenues from charter when owners hadn’t reserved airplanes.
A charter broker said, in retrospect, he was surprised and happy to be able to book flights from Jet It.
He noted other operators such as PlaneSense, Vista Global, and Wheels Up had dramatically cut back or shut off availability in the wholesale market as they struggled to meet the needs of their own members.
Advice from an attorney
Asked what advice he would give to Jet It owners and fractional owners in general, aviation attorney David Hernandez of Vedder Price says, “A crisis situation requires immediate and comprehensive analysis. Unfortunately, most owners simply believe a crisis will never occur, and, frankly, many have never thoroughly read their program agreements. As a result, most owners are simply unprepared to handle most crises when they arise.”
He says all fractional owners should “thoroughly review your program agreements” right away so they have a basic understanding of their rights in case of a provider failure.
He recommends, “Determine all available options based on the relevant circumstances, create a resolution plan, and immediately execute the plan. Act fast because available rights and remedies evolve rapidly in a crisis situation, and those who delay may be left with nothing.”
He also cautioned against “relying on the advice of brokers or consultants because their primary concern is not to protect your rights under the program agreements.”
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