The private jet industry has been termed as the ocean of opportunities for the new age entrepreneurs, because of the ‘free-leg’ spaces and decades old operation module. JetSmarter took the initiation to grab the space in the year 2013 and by the year 2015, it came as the boon for the private jet service companies to get their vacant spaces utilized. Okay, with $7,000 membership fee and $2,000 initiation fee, it was the deal worth a pick, of course for the frequent first class and business class flyers.
The popularity of the company spread like the wild fire among the people who were making fortunes but were somehow unable to afford the private jets. The luxury it offered, was enormously exclusive. With no waits in the long queue and the hassle-free entrance to the seat booked, evolved as the USP of the company. Even once Kim Kardashian had said that she was ‘obsessed’ with the services of JetSmarter.
Tim Martz, the man who made it big in the field of radio broadcast, bought the deal in the year 2015, by paying $7,000 as the annual fee and $2,000 for the initiation of the service. The mobile app of the company would be used for booking a seat in the flight. Martz cashed out his membership well enough and travelled a lot during the first six months of his membership. He flew from his Denver home to the vacation paradises like Los Angeles, Las Vegas and many more. How much satisfied he was, it could be estimated from his statement, “I am paying this much amount of money and getting $15,000 flights for free, which is a fantastic deal.”
In the last two years, the company has become one of the fastest growing start-ups. The company, after getting the fund of $105 million by the Saudi royal family and Shawn “Jay Z” carter in December 2016, its valuation sky rocketed to $1.5 billion and led to the elite unicorn club of the start-ups. The experiences of the customers were atop the mountain of satisfaction and ‘luxury in sky’ became the USP of the company.
When and why did the turbulence start for the customers of JetSmarter?
In the year 2015, the company created its own inventory and had initiated a shuttle service between the hot spots like New York, Los Angeles and Miami. The members could book the seats in the shuttle services for free and the consumers could create a shuttle that used to suit their date and time along with a luxury seat on a jet (not to mention, without paying an extra buck to book the seat on a luxury jet). The deal used to be kickass undoubtedly. For the members, who used to take an average of 100 flights in a year, it was the magnificent deal which used to cost $450 for a seat in private jet, minus the hassles of airports, the baggage claim, the security check-ins.
JetSmarter, after getting funded, made some drastic changes in the business model that proved to raise the agony among the consumers of the company. The first change it did was, it cut down on the meal that used to be provided onboard. Thus, the consumers that were getting the perks of free meals in the sky, were bound to pay hundreds of dollars for the same. Soon by the year 2016, the company did the drastic changes in the perks associated with the membership. Free helicopter rides to the airports was one of them, and the company revoked this perk for the members. Traveling around the holidays started costing extra bucks for the members. And the members were denied the perk of reserving the whole jet without paying extra sum of money. Clearly, it didn’t go well for the older customers and some of them decided not to renew their membership with JetSmarter.
Between the year 2015 to 2017, company set the membership fee ranging from $5000-$15,000 but it raised the all-inclusive membership fee from $7,000 to $15,000. The company also introduced an upper tier membership fee of $45,000. It is said to have some extra and unique features. The company is desperate of getting over the losses. And this is the reason why JetSmarter is looking for cost cutting. The sudden changes in the membership plans are the outcome of the company’s decision to get the cost cutting done effectively.
The continuously changing deliverables were alarming for the members. One of the members spoke, “If I renew the membership, I would still be unsure of what benefits I would be getting, because so much changes in the deliverables make it a deal with no surety”. Of course, the bottom line of any deal is Company can’t change the variables for which the customers have paid for.
The unrest among the consumers
To get over the membership fraud, some of the consumers decided to be vocal about the scheme of JetSmarter, few members decided to join the private chat rooms where the consumers would share their travel experiences and share the seat booking information, to get the maximum benefit. One member of the group started speaking about company’s unethical ways to suit the profit but making the membership clauses flawed. He spoke how he was said to have some perks, but the company, without seeking any suggestion or ideas, changed the variables of the clause. The meal plan was revoked, along with the free helicopter rides. When the CEO of JetSmarter Sergey Petrossov was contacted over the issue, he said, “Our consumers come from the elite background, they are getting to fly the private jet. It is absurd to know that the meal plan of few hundred dollars seems like a catch of a deal for them. There are many consumers who are still very much satisfied with the services that JetSmarter offers to them!”
But the real pick is, the members who complained about JetSmarter in the group, were ‘warned’ by some of the members of the group. One member even got the private message that read “careful what you say in the chatroom, the keep an eye on everything”.
The members who rose their voices against the frauds of JetSmarter, their membership was cancelled within the span of two days! Which is because of the fact that the company’s membership agreement includes a non-disparagement clause, which allows JetSmarter to terminate the membership of anyone who raises the voice and makes negative comments about the company or its employees. Which is why, even on the discomforts, members are afraid of complaining and voice their honest opinions. Even in the private chat rooms.
Some of the members said that JetSmarter didn’t renew their membership because they spoke about the company’s policy publicly. The company gave them irrelevant reasons for the termination of their memberships. Two of the members (brothers duo) had their membership revoked because the company said that they had posted a picture on Instagram which was provoking the racism and was intruding the privacy of the flight members. Another member initially said that his membership was terminated because he spoke about the company’s policy openly. But he later acknowledged that he had made some vulgar comments on getting laid with some girls, which according to him, was written in the letter of the termination. But then, the former said, “It’s a private jet. I can say whatever I want!”.
Some of the members say that JetSmarter has fielded its employees in the private chat rooms to keep an eye on the members of the scheme. One of the most vocal defenders of the company in the group has the area code of Florida, where the JetSmarter is based. Some of the members fear them so much that they don’t even want to raise their voices, though they know that they are getting pissed of the company’s policy to change the membership plans whenever they want to, but then, none of them wants to lose the membership of JetSmarter. Few members are waiting for their membership period to get over so that they could voice their honest opinions. One of the members (on term of not getting his name out) said, “Unfortunately I can’t go on the record because it seems like, the second they see members saying bad things they cancel your membership and don’t give you your money back”. In continuation he said, “But the second my membership is over I plan on writing a scathing review so people don’t have to get conned by these people.”
What we can get is, the image building tactics of JetSmarter is working to the limit for the company. But this non-disparagement clause, to be very lucid, would not work for the company. Last year, the US has passed the Consumer Fairness Review Act, which would not let company to induce something in ‘terms and conditions’ that would stop the consumer to give the company or its products negative feedbacks. And if the words of Eric Goldman are to believed, who himself is a law professor at Santa Clara University School of Law, the Consumer Fairness Review Act would definitely take JetSmarter into its claws, but to what extent? Only time will tell.
The CEO of JetSmarter, when asked about revoking the membership without giving them the valid reasons, never showed the clear picture. But he was pretty much blunt on handling the members of the scheme. He said, “I’ll be frank with you, there are certain people who don’t mesh with our community. And we take a very strict stance toward the type of people we bring in. You’re in a tube, you’re in a small airplane and we are trying to create a group of people that are like-minded, that are respectful to each other. It’s very difficult. This has not been an easy thing to do.”
Ronn Torossian, who looks for the public relations of the company said, “What you’re talking about is somebody won’t pay a few hundreds dollars to take a helicopter, to get on a private plane? It sounds to me like very wealthy people, most of whom are very happy with the company, who might feel like the company should be subsidizing everything they do.”
While many of the current members of JetSmarter feel that they were shown the moon during the signing stage of the membership, still some of them feel that JetSmarter provides the luxury which is far fetched when one travels in the regular airline services. But then, few do feel that there had been disappointments and they do want more of it, the way they had been told during the initial stage of the membership.
The Case Study of JetSmarter
JetSmarter usually uses N977CS or N945GS for the cross-country flights, both of the flights are Gulfstream G-IV and are operated by the Van Nuys based Jet Edge International. Usually, these flights have 13 seats to fill, but the company’s policy is to fill 12 out of 13 seats. So, if we include the fedral taxes, it costs around $30k per flight on the usual roots (It’s an approximate estimation, it might be greater than this, around $32k). The per seat cost for a single flight costs around $2,500 to JetSmarter, but the company charges around $600 per seat to its consumers. Clear calculation states that the company is filling the cost from its pocket to pay the jet suppliers. This is the calculation for a single flight, not to mention, the company runs numbers of flights as the shuttle services and per flight, JetSmarter runs on the loss of some $22,000. The question arises, who’s filling up the gap of the loss?
Let’s take an example of Avion Private Jet Club. The company was based in Southern California and demolished its services a decade ago. The factors in the aviation industry have been pretty much the same till now. This company had the main focus on a single route, from LA to New York with per seat cost of $7,700 one-way. The annual fee of the membership was $6,250 with the activation fee of $20,000. Even for the costing, the company couldn’t sustain in the market and here we have, the JetSmarter, which charges way lower than what Avion used to charge, and still flying in the market. How is that even possible? Also, with 250 employees in the company and huge PR costs that drains a lot of money out of the pit, how are they able to pull off? The investors must be blinded enough, and yes, the PR is way too strong with the ability of compelling the investors to keep investing the money in the company!
Who is gaining from the loss?
There is no way to compel the air carriers to make them fly on a regular loss. Like one of the air carriers Jet Edge International and many other air carriers associated with the company would not be able to fly on the regular basis if the companies are not paid well, at least the amount that is frequent in the sector of private jets. This is pretty much clear that these companies are making capital by providing their services to this company.
And the elite gainers are the consumers of the JetSmarter’s scheme. Let’s be very clear that, if the person takes around 60 flights in a year through the services of JetSmarter, that person is not at loss. It’s indeed a good deal, to stretch the legs in a private jet and get the luxury at some 30,000 feet. But then, this company loses onto the part of not delivering what the consumers are promised. Yes! This fact cannot be denied if someone would term the schemes of the company as the ponzi scheme. If the consumer gets above the fake promises of the company, and really loves to enjoy sharing the little spaces by facing a complete stranger, the consumer is winning. Else, the winners are the jet providers. The air carriers are winning!
Who are at the loss?
There are hundreds of micro investors that are pouring millions of dollars for this company. But the question tickles, for what good purpose? The investors are in the hope that they would make fortune out of this company once the company announces its IPO. That’s a bunt hope! Aviation industry demands huge set of skills, from the lower level to the higher one. JetSmarter has been termed as the ‘Uber’ of the jets, but is it as easy as operating the fleet of cars on the streets? Definitely not! A simple GPS doesn’t run the flight, the way it does for Uber. It is hard to understand that a group of young lads enters into the aviation industry which is hell expensive, and start giving the seats at loss!
Clear indication is, the company is burning the cash of the investors and is ‘trying’ to make its customers happy. Though, by inducing some aggressive image building tactics but yes, the company is getting it done. To make the company’s legitimacy stronger, the company introduced Tom Ridge, who is the Former United States Secretary of Homeland Security into it’s board in the year 2016. It is hard to digest that the company is able to compel the bigger and reputed names in the market, to get onboard. What kind of loss the people like Tom Ridge could get, is hard to decipher for now!
Are the employees of JetSmarter at loss?
In the year 2017, the former employees of the company sued it for not paying them for thousands of extra hours they had worked for. One of the former employees, Grace Lamey had worked as a shuttle experience manager and she used to deal with the customers for the reservations, boarding, handling them food and drinks. Lamey’s lawsuit says that during her three years of working time, she had worked for extra hours, more than 65 hours a week, even six days a week, sometimes on Sundays too. Her lawsuit claims that she was never paid for the extra hours and had been paid much lesser than what she worked for. This was the violation of air Labor Standard Act. She had to leave the company in March, 2017. Lamey is not the only one who has been victimised, there have been many like her, who have been paid lesser than what they deserved.
On addition to that, the insiders revealed that JetSmarter failed to deliver the pay checks on time. One of the current employees said that an email forward from the senior human resources manager Andrea Wolniewitz explained that there was a change in the payroll and thus, there would be the gap of three weeks before the checks would appear for the employees and also wrote that the paychecks would be smaller as the company would issue more checks each year.
The former employees along with the current employees have confirmed that the company has been regularly cutting down on the percentage of the payouts on sales and is unable to deliver the checks on time. This is because, what the employees have established, the company is running short of the funds and the finances of the company are shaken to the core. And this fact is backed by the cancelation of the helicopter services in New York, because the company was unable to pay the companies it had contracted for the helicopters. A former employee of the company said, “You would be there late working a fancy party for customers, handing out food, champagne, that sort of thing. And then you would wake up the next day to find your paycheck was late.”
The company is somehow unable to satisfy the employees, delay in the paychecks is one of the prime factors, extra working hours come next! The kind of Ponzi scheme the company is running, is hard to notice once the eyes are dazzled by the promises made during the initiation of the membership. We just hope, no more people get fooled by the company now.
Dissatisfied customers, dissatisfied employees, and ever-changing schemes, and continuous loss but hats off to the PR of the company that it managed to increase the number of members from 1,000 to 7,000 by the year 2017. If you have been one of the dissatisfied customer, who has been fed up of the company’s policy or you are one of the customers who’s membership was terminated with the sudden effect, or you’re one of the dissatisfied employees of JetSmarter, do write to us on <email id>. We would raise the concern, till it gets heard!