Travel on private jets begain as the exclusive domain of the wealthy elite, and remains so to this day. There are three basic business models in the private jet travel industry, each one of which is only accessible to those with lots of money:
Fractional Ownership
In the fractional ownership model, the owner (usually a corporation) purchase a 1/16 to 1/2 share in the ownership of a specific jet. A 1/16 share will typically buy them 50 hours of travel per year and will cost in the neighborhood of $500,000. This model is appropriate for companies or individuals who know they will be travelling at least 50 hours year after year and who want the prestige of claiming that they ‘own’ a jet. It is the most prestigious, most convenient, and most expensive means of private travel.
Jet Cards
Jet Cards are basically pre-purchase time on private jets. When members fly on private jets, the balance on their allotted time is reduced accordingly. A typical Jet Card offers 25 hours of flight for a price of $100,000, or $4,000 per hour of flight. Assuming an average flight speed of 500 MPH, that equates to a cost of about $8/mile. When a Jet Card member is ready to travel, they simply contact the charter company and request the time and place for their flight and the charter company provisions the jet. Travelers typically travel as a single party.
Private Charter
There are also companies that will arrange for charter jets on a per flight basis. Customers simply specify their travel requirements and these companies search their supply of operators to find one that can accommodate. These flights are typically more expensive since customers are not buying memberships in bulk, ranging from a cost of $3,000 to $9,000 per hour, depending on the size of the jet. As with the Jet Cards, flights are typically taken as a private party of one or just a few people.
Shared Travel and Dead Legs
In an attempt to improve utilization of these expensive assets, some of these companies offer the option to share a ride with another customer if possible. This is not a common practice, however, because the established culture in the private jet industry is one of exclusivity and convenience. To share a ride with another party means sacrificing on both of those points. And since a split ride requires two parties flying to and from the same location at about the same time, it is a fairly rare occurrence.
Many charter companies also post dead legs (when an aircraft returns to it’s home airport without any passengers on board). However, since there are relatively few of these dead legs spread out across numerous charter companies, the lists usually look like a random collection of one-way trips. Thus, it’s not common for the type of person who can afford to fly private jets to happen to see a dead leg that is of interest to them.
Existing Business Model Summary
Thus, the existing business model is fairly inefficient, with lots of time on the ground as aircraft wait for their private owners to need to fly, with most flights going with a relatively low occupancy, and with quite a few dead leg flights. This inefficiency is not a problem for the industry, however, because the super-wealthy customers are paying for the convenience and exclusivity that this arrangement provides.
Key Benefits Under the Current Model
Virtually every company in the private/corporate jet industry focuses on the same key customer benefits:
- Privacy
- Status/prestige
- Convenience
- Time Saving
- Flexibility
- Increased Productivity
- Quality of Service
- Reduced Stress
Cost is not much of a factor, and most pricing structures are pretty close to the same. There are currently no (i.e. zero) private jet charter companies that differentiate from the field based on price.
Primary among these benefits is ‘privacy’, and the idea of traveling with other parties is anathema in the current marketplace. Because the existing customer base has traditionally not been interested in (or in need of) shared flights, this concept has never taken any kind of root.
Business jet travel remains the exclusive domain of the financial elite–that is super-wealthy individuals and corporate executives, along with their inner circles.