JetSuite CEO Alex Wilcox is a firm believer in the light jets charter market. His company is consistently rated in the top four or five US charter operators in terms of number of hours flown and JetSuite’s results prove that his business model – which includes a vigorous approach to selling discounted ‘empty legs’ – works.
By his own account, he got into the light jets charter market at the peak of the hype surrounding the very light jet (VLJ) segment. “You could almost believe the hype at the time that every garage would be sporting a VLJ,” he recalls. That story vanished in a puff of smoke when the global financial crash of 2008 took hold, but the demand for competitively priced short-haul charter did not go away.
The story of JetSuite’s early years was covered in EVA’s NBAA 2014 edition. This time around we spoke to Wilcox about his decision to add ten Phenom 300s to his fleet of Phenom 100s through 2016.
Q: When we last spoke, your business model was absolutely focused on going to the pre-owned market for all your fleet acquisitions. Will you be holding to this model for your Phenom 300 purchases?
A: Absolutely. As we acquire the Phenom 300s we will slowly phase out our Cessna CJ3s and we will be looking to the pre-owned market for all ten of the Phenom 300s that we intend to buy in 2016. We like pre-owned aircraft. They are a vital part of our business model. We can repaint them and refurbish them so that the customer sees no difference between them and brand new jets straight from Embraer. However, while the customer sees no difference, our balance sheet certainly does! On the Phenom 300, across all ten aircraft, the difference to our balance sheet is likely to be of the order of $20 million in our favour.
Q: In moving from the Phenom 100 to the Phenom 300 you have clearly given time for the larger light jet to prove itself and its reliability. What do you think of Honda’s brand new entrant to the light jet segment?
A: As far as we can tell, the Hondajet does not really do anything different from the Phenom 300, while since it is a brand new product, the jury is still out on its reliability – and of course there is no pre-owned market in Hondajets yet. I am not a fan of taking a pioneering position as the launch customer for a new model jet. Reliability and known, proven lifecycle costs are fundamental to our business model and we have to see these develop over time before we take a position.
The Phenom 300 has proved itself to be a world-class light jet. Another important factor is that when a pilot has certified on a Phenom 100, he’s good to go on a 300 as well, so that makes the choice of upgrade a no-brainer for us.
However, in January 2016 we will be announcing the addition of a larger jet to our fleet to cater for longer trips. With the addition of a larger aircraft, our business model will still be solidly in the light jets category, and of course the repositioning costs on a larger jet are substantially higher than for a light jet – but you charge more by way of compensation. We are adding new customers every day, so I am confident that our model really works and will continue to do so.
Q: When we last spoke you had what sounded like an excellent system on your Facebook page for selling your empty legs. How is that working out?
A: We have created a detailed wish-list of functionality on our empty legs system, so that anyone wanting to fly at a bargain price can readily find a flight that matches their requirements. We have some 60,000 subscribers to our system on Facebook and we sell probably around 20% of our empty legs. When you consider that these are posted the night before the flight, that equates to a very successful marketing tool for us.
Q: How optimistic are you about the state of the charter market in particular and business aviation in general as we go into 2016?
A: In my view, from a health perspective, it’s good and getting better. Oil is very helpfully priced right now. We are seeing some shakeout and consolidation in the OEM market, but that is to be expected. We are huge fans of Embraer. We love the reliability of their fleet. In my opinion, the quality of their support and engineering will, in time, enable them to dominate the business aviation industry. In some categories they have already surpassed Gulfstream. If Gulfstream’s products are like Ferraris, Embraer’s are like Fords – they just run and run.
Q: Your model has been very successful, as shown by your fleet utilisation figures. What do you put that down to?
A: I see new business models emerging all the time in the charter market. Some of these, launched by our competitors, are based around the concept of an annual fee. With us, you put money into your JetSuite account and the only thing that depletes your balance is when you actually fly. There are no member fees to shrink it. Our model is about private flying and this is all you pay for.
Q: I see you have signed a partner agreement with Kenny Dichter’s Wheels Up to provide lift where Wheels Up members have a group that is larger than four?
A: Yes. Of course, we provide a jet whereas Wheels Up is providing members with a King Air 350 turboprop. There is no comparison between a King Air and a Phenom 300. However, the arrangement holds out promise for both parties. We are keen to see any solutions that expand the number of people opting to fly private rather than scheduled airlines.