businessman-checking-at-his-laptop-on-the-planeIn a world where even the largest, supposedly most financially secure aviation companies are faltering, how can you ensure your jet card purchase is safe?

All About Jet Cards

Charter companies, including RAI Jets, offer jet cards as an economical, hassle-free way to book private flights. Jet cards allow a customer to purchase a block of flight hours to use whenever they need service.  Typically, rates are fixed and prepaid, so quotes are usually unnecessary. Booking is quick and convenient, although the process may vary slightly, depending upon the charter operation.

Many jet cards are sold as part of a subscription or membership model with an initiation fee and the required annual flight hours.  At RAI Jets, we structure our RAI “Life of Riley” Jet Card differently. From the beginning, our goal has been to offer customers a safer, more reliable way to fly and an effortless booking experience with world-class concierge services. Therefore, our jet cards have no membership fee, long-term contractual commitment, or expiration dates. Jet card customers can transfer their flight hours and fly when they want, as much as they want.  A jet card is an asset as long as the company that sold it can honor their terms.

Jet Card Woes

Jet cards are an investment, and understandably, customers want to know their investment is secure. Most of all, they want to know that the company holding their jet card will be there tomorrow and next year to deliver service. When air charter companies with jet card programs begin to have financial difficulties, customers start to worry about their service and their investment.

Two examples of jet chart companies being watched closely by their jet card customers are WheelsUp and VistaJet, two giants in the industry. Both have been in the news lately for their heavy financial losses, despite their big dollars in jet card funds.

Wheels Up began as a membership-only model in 2013 and expanded into other aviation solutions. They denied bankruptcy rumors in May and declared that the company was progressing “with redesigned programs to better serve its members and customers in support of our path to profitability.” 1 The company has $1 billion in prepaid flight hours on customer cards and is working with other carriers, such as Delta, to service their customers.

A few months ago, the Financial Times reported that VistaJet’s debt more than doubled to $4.4 billion last year but still managed to grow its fleet. When asked to comment on CNBC, the CEO of VistaJet said that even though they had $831 million in nonrefundable prepaid trips and a cash position of only $134 million, they only needed 22% of the number to keep servicing clients. 2

Customers with millions prepaid in jet cards are understandably concerned about what will happen to their investment if the companies cannot continue service. Others watch the company that holds their jet card credits struggle financially, on edge that they may never receive a refund or proper service for their initial investment.  When Warren Buffet of Berkshire Hathaway was asked to comment on the financial problems at Wheels Up, he prophesied that “there’s a good chance some of the 12,600 people who gave the company more than a billion dollars in prepaid jet cards are going to be disappointed later on. 4  Recently, Wheels Up similarly expressed “substantial doubt” about its ability to continue operations, sending its stock plummeting. 5

Business Models Matter

Both Wheels Up and VistaJet share a similar business model where they purchase and retain aircraft ownership. 3 The pressure to maintain and maximize the use of their fleet while ever-expanding to meet a growing need is challenging. Other firms have a different model that offers “fractional” ownership, where several owners may share the cost of a private jet. Other charter operations, like RAI Jets, are Part 135 operators who don’t own any aircraft but manage aircraft owned by others. The owners lease the planes to the operator for use on their charter certificate.

So how can you be sure that when you hand over your dollars for a jet card that the company will be able to serve you well in the future?

Jet Card Security

The lesson behind the demise of the “big guys” shows that when you purchase a jet card, you’re not just buying flight hours; you’re putting faith in the company behind it. The security of your jet card lies not only in the product itself but in the integrity and financial integrity of the company that is selling it to you.

Our business model allows us to service customers reliably. We do not sell more than we can service, nor do we make risky investments to be the biggest in our market. The way we run our jet card business is also the product of being beholden, not to a group of stockholders, but to our customers. There are advantages to the way we do business.

If you are a former Wheels Up or VistaJet customer looking for a more flexible, secure way to fly, the Life of Riley Jet Card may be for you. We’d welcome the chance to talk and see if we might be the aircraft charter and management company for your needs. If you’re interested in a conversation, call us at 800-247-2834.

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