JetSuite: Proving the VLJ sceptics wrong
While European VLJ operators are struggling to convince the industry that their model can work, the debate going on at the California base of JetSuite is just how fast they want the USA’s fastest-growing private jet operator to grow. Its chief executive, Alex Wilcox, says the company will go US-wide, and continue to prove the naysayers wrong.
You would be forgiven for thinking it is merely an airline that has been shrunk. The engines of each of its fleet are adorned with the company name and fixed low-cost fares are offered to customers online. But with a fleet of 11 Phenom 100s JetSuite is making the very light jet model work.
The firm has seen steady growth over the last year and has now got one eye on expansion. “Demand has been growing at 5% a month with static capacity over the last 12 months,” says Alex Wilcox, chief executive of JetSuite, “the internal debate at the moment is when we should launch on the east coast.”
The company’s 11-strong fleet operates in California, the Southwest and Texas, with another aircraft due in November. “I think we’re probably a year away from the east coast, as we need five planes minimum to make it work,” says Wilcox. “In five years we’ll want to be coast to coast for sure, and hopefully have around 200 planes.”
Wilcox says he sees plenty of evidence of the market for JetSuite’s services. “There are plenty of people out there who aren’t flying private that should be – 75% of flights in the US are under two hours, and 95% of trips are for fewer than five people.”
Every method of making those people aware of the JetSuite alternative is being explored. Each day between 4pm and 6pm Pacific time, empty leg deals are listed on Facebook giving the airline’s 14,000 fans the opportunity to hire an aircraft for $499. At the end of September they even auctioned a flight on Facebook.
A new partnership with Singapore Airlines allows first class passengers to avoid standard connections at Los Angeles and San Francisco and use JetSuite instead. This service should especially appeal to Asian gamblers flying to Las Vegas.
But while JetSuite is seeing strong demand from leisure travellers, the true test will be whether JetSuite can get business passengers. Wilcox says only 30% of business so far has come from corporate clients. “Penetration is the hardest thing for us,” he says, “there is an aversion to VLJs and a scepticism about the size of our planes and the service they can offer.”
Another challenge is finance. JetSuite owns ten of its fleet, leasing the other two. Tony Hsieh, the founder of distribution company Zappos.com joined JetSuite’s board last month after leading the latest $7 million investment round. This equity will be used to fund expansion. “This does tie up capital, but we are shifting more towards leasing,” Wilcox says, “when JetSuite was setting up getting the finance was impossible, now the markets are coming back to us.”
Trouble securing finance in 2010, including an episode involving a Jordanian Sheikh pulling his money out at the last minute, lead Wilcox to call his friend and former boss David Neeleman, the founder of US low-cost JetBlue and Brazilian airline Azul. “Once I showed him the numbers on the Phenom, he was sold,” says Wilcox. Neeleman is also a strong supporter of Embraer jets, buying their commercial aircraft at JetBlue and Azul.
The Phenom’s numbers, Wilcox claims, are what make the business possible. “It’s better to be lucky than smart, and we got lucky with the Phenom,” he says. “It’s the simplest and most efficient airplane ever built – we couldn’t do this with the Eclipse or the Mustang.”
Like JetBlue simplicity is key to the business plan. “People used to ask me what our hourly rate was, and I would say ‘What is it on Delta?’ People were so sceptical that now we put a maximum hourly rate online,” says Wilcox.
Another departure from the traditional private jet operator model has been to encourage customers to book direct. “We don’t hide who we are,” says Wilcox, though he admits this has lead to a somewhat frosty relationship with brokers. “Brokers certainly have their knives out for us. In the first few months about 70% of our business was through brokers, but they’ve been deserting us as more people are coming direct,” he says.
“There are some very, very good brokers out there who really add value to their clients,” he adds. “But we found people were coming to us because some brokers were marking up too much.”
Wilcox is aware of the efforts of VLJ operators in Europe, and believes conditions in the US are more suited to the model. “There’s a limited public transportation system here. We have a big geography and not enough trains. If your town isn’t big enough for Southwest you don’t have many options.”
The question is whether JetSuite can cover the entire country without adding different size aircraft to its fleet. “It’s a possibility,” says Wilcox, “but one thing I’ve learned is that first you need to be very good at one thing. We want to be the Southwest of private jets.”
“This will absolutely go US-wide,” he adds. “It’s always fun to prove the naysayers wrong.”