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A high-profile private jet company abruptly announced it was shutting down due to the coronavirus, leaving questions about the fate of possibly $50 million in customer payments.
JetSuite, a Dallas-based private jet charter operator, posted a notice on its website last week that it is grounding its fleet and furloughing most of its pilots because of a “dramatic downturn” in business from Covid-19.
JetSuite didn’t give any details on whether it would reopen, but said “please accept our deepest apologies for this sudden, but unavoidable and necessary cancellation of all flights until further notice.”
An email sent to JetSuite’s press office was returned, saying “the email account no longer exists.”
JetSuite and its sister company, JSX, were highly celebrated in the private jet industry and attracted big investors, including JetBlue and Qatar Airways. JetSuite’s founder and CEO, Alex Wilcox, was a founding executive of JetBlue.
JetSuite offered private jets for charter through its SuiteKey program, where wealthy individuals and companies paid deposits of between $100,000 and $500,000. Customers would then charter private jet flights — typically for around $6,000 to $7,000 an hour — that would be drawn down from the deposits.
JSX acted more like a scheduled airline, using repurposed regional planes to fly to private terminals that allowed passengers to avoid TSA lines. JSX continues to operate a limited number of flights.
Doug Gollan, founder of Private Jet Card Comparisons, estimated that customers had $50 million or more in deposits at JetSuite when it shut down. The company has not told clients what happened to those funds or whether they will be refunded.
“Customers aren’t being told anything,” Gollan said. “The way they structure their program, these deposits are nonrefundable and can be used for operations.”
The private jet industry is set to receive a portion of the $50 billion in federal stimulus for aviation companies, in the form of grants, loans and tax breaks.
WingX estimates that business jet and private jet flights dropped 79% in the first two weeks of April. Industry experts say that because the wealthy aren’t traveling and businesses have cut all nonessential travel, private jet companies are scrambling to cut costs to maintain basic operations.
Aside from NetJets, which is owned by Berkshire Hathaway, private jet companies are largely privately held and many have used debt to fuel rapid expansion. If the crisis drags on well into the peak summer travel season, some could face financial strains, analysts said.
Some private jet executives said they remain optimistic about a strong bounce back once economies begin to reopen — especially for domestic travel. They said lingering fears of the coronavirus, which has sickened nearly 2.5 million people worldwide and resulted in at least 171,249 deaths, will cause many older and affluent fliers to switch to flying private, to avoid the cramped cabins, crowded airports and long lines of commercial flights.
Ken Ricci, principal of Directional Aviation Capital, which includes Flexjet, Sentient Jet and PrivateFly, deferred 100% of his salary and asked employees who could afford it to also defer a portion of their salary. Fully 86% of employees participated.
Wheels Up has reduced costs and work schedules and added voluntary short-term leaves to offset the slowdown.
“We are confident that the overall market for domestic private aviation will grow significantly post-crisis, which bodes well for our business model,” said Kenny Dichter, founder and CEO of Wheels Up. “We remain in a strong position to meet the projected increase in future demand.”