Private jet fliers increasingly turn to prepaid cards
You're a well-heeled private jet frequent flier. Still, you hate
haggling over charter fees every time you need to dash off to a business
meeting or weekend retreat. So boring.
Good news: You may not be Warren Buffet, but starting at about
$125,000 you can buy a debit card that makes it easy to book flights with his
charter jet company. Buffet's Berkshire Hathaway owns NetJets, one of several vendors selling prepaid private jet cards that let customers budget ahead and
guarantee last-minute access to luxury flights at a set price.While one-off charters still dominate the market, cards have become increasingly popular in recent years.
"You've got all the convenience of just picking up the phone and
arranging a flight," says Nick Copley, president of the luxury property guide
SherpaReport.com. "You've also locked in a price for a certain aircraft or
group of aircraft. So you're not negotiating each time you fly or trying to
find the best deal."
The Costco principle --
for the Cristal crowd
Customers -- primarily celebrities and C-suite members at
multibillion-dollar corporations -- benefit from buying flight time in bulk. According
to Copley, the cards are designed for people who travel 10 or more hours a year.
You buy the cards from large aviation companies, smaller operators and charter
brokers. The typical card covers 25 hours of flight time, which includes crew
and catering. Some cards require you to use up the time within a certain
period, while others have no expiration date.
"A 25-hour card on a light jet like, say, a Hawker 400XP, which
carries six to seven passengers and has a range of about 1,400 miles, costs
around $120,000 to $130,000," Copley says. While 25-hour cards are the industry
default, according to Copley, you can also find debit cards with no pre-set number of hours.
Instead of purchasing flight time on a specific aircraft, these flex-hours debit cards allow you to select from a variety of planes for each trip, each with a different hourly
And if you lose your card? Don't worry, it's not like a gift card. "The company you buy the card from keeps track of how many hours you use or how much you spend," says Copley.
The prepaid packages have an extra benefit over standard pay-as-you-go jet chartering. When you charter, you pay a premium to cover what
the industry calls "the empty leg." If you're planning to stay in your
destination for more than a couple of days, the empty jet has to fly to another
spot for its next mission, and your charter fee pays for that flight as well as
your own. With a jet card, while you will generally pay a higher hourly rate
than you would for an individually booked flight, you won't incur a separate
charge for the empty leg, according to Copley.
Born with the baby
The private aviation market got started in the 1960s, with surplus
World War II aircraft being sold to corporations and retrofitted for business
travel, says Richard Zaher, CEO of Paramount Business Jets, a private jet
charter brokerage company in Leesburg, Va. "The model of flying privately has
changed over the years considerably," Zaher notes.
The 1980s brought fractional aircraft ownership, which follows a
format similar to vacation time shares. You pay a lump sum upfront for a share
of a plane, plus a monthly management fee and a fee for every hour you use. In
return, you're guaranteed access to the plane on short notice.
Jet cards made their debut in the 1990s, with small operators
entering the market first and NetJets in the vanguard among larger companies
with its Marquis Jet Card, Zaher says. Some of the companies selling jet cards
are fractional owners themselves. For many customers, the cards are a better
That doesn't mean they're within reach of the regular Joe, even those
used to first class. Magellan Jets, based in Quincy, Mass., offers a 25-hour
jet card starting at $99,000 with hourly rates ranging from $3,960 to $14,500.
|Private jet prepaid cards
||Continental U.S., Canada, Bahamas, Bermuda and parts of the Caribbean and Mexico
||4 options depending on aircraft, from $110,000 to $232,500
||Prices guaranteed for 12 mos., no expiration
||Additional fuel surcharge
||U.S., Caribbean, Bermuda, Mexico and Europe
||25-hour and 10-hour (limited to U.S. Northeast)
||Depends on choice of aircraft. 25-hour card starts at $99,000; 10-hour card starts at $34,950
||Catering included, no repositioning fees, no daily minimum with 10-hour card
||Additional surcharge for 25-hour card; fuel cost included on 10-hour card
||25-hour and 50-hour
||Depends on choice of aircraft. Starts at $124,900
||25-hour card expires in 18 mos., 50-hour card in 24 mos. Optional extension to 36 mos. at higher hourly cost. Unused hours carry over with new card purchase
||Additional fuel surcharge
|Paramount Business Jets
|4 levels, from $100,000 to $1,000,000
||Fixed management fee of 10 percent to 15 percent, concierge service, personal adviser, price quotes show operator cost and commission
||Additional fuel surcharge
||Continental U.S., Bermuda, Caribbean, Mexico
||$100,000 to open, $50,000 to replenish
||Concierge service, discount for 48-hour advance booking, refundable unused balance
||Fuel charge included in hourly rate
Keeping it fresh
As the market has matured, jet card issuers have started offering
different features. Three years ago, Paramount upgraded its jet card to offer
what it calls its "Trust and Transparency Model."
"We will show you what the operators are actually charging and add
on a fixed, low management fee for each trip," Zaher says.
For high-stakes business execs who need to stay connected in
flight, Magellan offers the WiFi Jet card for the G450 airplane, from $8,850 to
$14,500 an hour.
The company also sells a regional 10-hour jet card for Northeast
travel aboard Linear Air's Eclipse 500 jet. The card costs $34,950, with no
daily minimum hours required, and users pay no federal excise tax or fuel
surcharge. Sampling one-way trip prices on the Magellan website shows Boston to
New York costs $3,495; New York to the Hamptons, $2,446; and Boston to
Washington, D.C., $6,990.
The aircraft is a Very Light Jet (VLJ), a new category to emerge
within the past five years -- also known as a personal jet. Built to hold three
or four people, VLJs are less costly to operate than larger aircraft, says
Magellan CEO Joshua Hebert. "It's a smaller plane -- and you don't want to be
in the plane for more than an hour or an hour and a half -- but it's a great
business tool for these short hops," Hebert says.
Milton Pedraza, CEO of the Luxury Institute, doesn't think there's
a huge market for 10-hour jet cards. "The question is, will people who really
can't afford to fly on private jets most of the time opt for a company like
that?" he says. "People who fly on private jets tend to meet a certain
threshold of wealth to be able to afford it."
Either way, the cards have transformed the way the business is run. For the rest of us, it's probably a good idea to hang onto that frequent flier card.
See related: For booking private jets, try the Gatsby app
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Published: June 24, 2013
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