Question: What do you get when you take a company that has lost millions since its inception, never had a profitable year, and laid off 75% of its staff, and combine it with a company that just spent itself into oblivion and went out of business?   The answer is something that only Monty Brewster could have thought of to satisfy his great-uncle’s demands.

In a news release filled with more buzz words than a crappy business school term paper, OneSky Jets claimed vicory in the Tron Group’s recent auction of Jets.com’s customer list and computers.  Perhaps the biggest synergy of them all is both company’s  ability to blow through cash on whiz-bang software (”several million lines of code” - sounds like a lot!) to optimize an ever shrinking portfolio of customer relationships. 

From our perspective, this is great news for the industry.  Greg Johnson & company will spend months splitting atoms together writing and integrating another couple million lines of code, and when they prove (for the 7th consecutive year) that they can’t figure out how to turn a profit,  someone can swallow them up for not much more than the $200k starting bid for the carcass of Jets.com

REGENT JET ANNOUNCES CHOICE ADVANTAGE™

USHERING NEW ERA OF VALUE AND FLEXIBILITY TO PRIVATE JET TRAVEL 

The Innovator Behind Jet Hedging™ Once Again Creates a New Category,
Delivering Value and Quality Without Counterparty Risk

Regent Jet’s Choice Advantage™ Program Is Now the Most Cost-Effective, Flexible and
Comprehensive Product Offering in the Marketplace

Boston, Mass., June 2, 2009 – Regent Jet, Inc., one of the fastest-growing private jet travel solutions in the United States, announced today that it is extending an extraordinary value to private jet travelers everywhere through its unique Choice Advantage™ program.  This latest enhancement to Regent Jet’s portfolio offers exceptional pricing on premium-quality executive business jets in the light, midsize and super midsize categories.

Through Choice Advantage™, Regent Jet shares the lower costs that are achieved through optimizing itineraries within the network, with a guaranteed quality of aircraft, and a minimum ARG/US gold rating.  

“Our customers tell us that the three most important factors in flying privately are Safety, Quality and Value.  With the introduction of Choice Advantage, we can guarantee a quality experience at a lower price point,” said Justin Sullivan, chief executive officer of Regent Jet, Inc. 

Guaranteed Quality of Aircraft

Choice Advantage is an excellent fit for travelers who prefer quality, vetted aircraft at a great price point.  To achieve the program’s guaranteed quality of service, specific aircraft have been approved for each category, while excluding certain less-desirable jets.

·         Light Jets: Hawker 400XP, Citation Encore, Citation Ultra, CJ 2, CJ 3, Beechjet 400A/400, Lear 40

·         Midsize Jets:  Lear 60, Hawker 800, Hawker 800XP, Hawker 850XP, Hawker 1000, Citation X, Citation Excel

·         Super Midsize Jets:  Citation X, Citation Sovereign, Hawker 1000, Challenger 300, Falcon 50

Aircraft specifically excluded from the program: Lear 31, Lear 35, CJ, CJ 1, Citation II, Lear 55, Hawker 700, Citation III.

“This is a natural extension of our game-changing approach to private jet membership.   Whether you want to fly on one specific jet, prefer the value of booking by category, or want to fly a combination of the two depending on your travel needs, our broad-based portfolio offers incredible flexibility along with our renowned commitment to safety and service,” said Sullivan.

Risk-Free Private Jet Travel

The on-demand nature of all of Regent Jet’s programs offer quality service without any of the counterparty risk that is associated with many Jet Membership and Fractional programs.   The company requires no up-front deposit.

“There is a reason that we are one of the only firms in the private jet market that continues to grow profitably,” said Ed Chapman, board member of Regent Jet.  “Our team continues to identify new solutions which are highly relevant to private jet travelers, turning the traditional Jet Membership and Fractional business models on their heads, and with no long-term commitment, we earn our business every time they fly.”

Rip Van Winkle….Sentient Jet’s new mascot

Memo to Sentient - 2005 called and they want their jet card back.

In a vexing move, Sentient has revamped their “Preferred Plus” offering to “Membership Plus” - offering a discounted hourly rate and their first foray into aircraft-specific jet sourcing for their clients. 

Membership Plus works just like Sentient’s traditional membership program, with a real benefit (discounted rates), a sucker’s bet of a benefit (jet-specific pricing), and a HUGE gotcha: your deposit is nonrefundable.

The nonrefundable deposit is brought to you by the same team that evaporated millions of dollars and left tens of millions unpaid to vendors this summer before being bailed out by new investors, and on the heels of two high profile failures: JetDirect (Sentient’s erstwhile owner) pushing two subsidiaries into bankruptcy, and JetNetwork LLC’s involuntary Chapter 7 filing.

Anyone putting unsecured, nonrefundable funds on account in this climate needs to have their head examined.  

Equally bewildering is the new ‘aircraft specific’ offering of a Hawker 400XP, Citation Excel and Citation X.  Essentially, Sentient has selected the best aircraft in the light category (the 400XP), the worst in the mid (the Citation Excel), and the worst in the super-mid (the Citation X) categories, and tacked on a premium on all of them.  

• For example: Included in Sentient’s Preferred Midsize category is the Hawker 800XP, 850XP, G-150 Lear 60 and Excel.  We submit that the Excel is BY FAR the least desirable of these options, yet that’s the aircraft that Sentient has standardized on, and that which they are asking members to pay a significant premium for access to, but all you get is the “certainty” of getting the worst option. 

• Similarly, Sentient selects the Citation X as their guaranteed aircraft in the super midsize cabin - at a fully-loaded rate of $9,615 an hour.  While the Citation X is a great aircraft, it is substantially smaller and less luxurious than the remainder of its brethren in the Sentient program, which include the Challenger 300, Challenger 604, Gulfstream 200 and Legacy.

For what it’s worth, Regent Jet can beat these prices on the exact same jets 7 days a week and twice on Sunday.

Guys, the answer to our ‘box of chocolates’ criticism is not to bring your best customers down to the lowest common denominator…and then charge a premium for doing so.

From an outsider’s perspective, this looks like a desperate and ill-advised move designed to capture the only growth that they think is out there - fractional and fractional card owners, but they are bringing a knive to the gunfight and attacking this market with far less selection, a clear-as-mud financial picture, a recent legacy of not paying their bills, and possibly the worst sin for this scrappy, entrepreneurial company - no imagination.

Two weeks ago, JetDirect Aviation placed its Regal Aviation subsidiary into bankruptcy, and on March 6, the second shoe dropped, plunging Sunset Aviation into Chapter 7 after firing all of its employees last week - the latest in the increasingly ugly picture of the post-Sentient JetDirect Aviation.  

The two moves, combined, leave aircraft owners, other charter companies, FBOs, fuel suppliers, municipal taxing authorities, employees and countless others holding the bag for millions in unsecured claims. 

After splitting from Sentient Flight Group, unwinding its FBO business, and selling two of its crown jewel 135 certificates -Sunset and Presidential Aviation- back to their original owners, CD Ventures has sold their majority interest in JetDirect to a private equity consortum controlled by Brantley Partners.

This is welcome news for JetDirect employees and creditors, who have been owed substantial sums by the firm.   While I feel personally that JetDirect has been very tough to work with in the past from a charter and fulfillment side, it is a confidence boost to the industry to see new money being pumped in to avoid another very high profile failure in this challenging climate.

Best of luck to these guys.  It’s in the best interest of our industry to see them survive and thrive.

From the January 31 edition of New York Times.

BUSINESS jets are a force for good. Really.

This may seem like an outrageous statement, especially right after the public hubbub that caused Citigroup — the beneficiary of billions in government bailout money — to cancel the delivery of a new $42 million jet.

But consider this: The General Aviation Manufacturers Association estimates that more than one million people are employed manufacturing, maintaining, flying and managing business aircraft. In addition to keeping legions at work in top-paying jobs, business aircraft facilitate and expand commerce for their users and contribute $150 billion to the American economy annually

With that in mind, it’s astounding to see members of Congress, the very people doling out hundreds of billions of taxpayer dollars to failed companies, disparaging and even actively trying to curtail this industry, which is already reeling from the economic and credit crises. The business jet is merely a tool — one that, employed correctly, could help those same struggling institutions soar again and start paying back the money owed, with interest

Perhaps a reality check would help: Envision a rectangle 11 feet long by 4 feet 9 inches wide. Now, stand in the center, scrunching down so the top of your head is no more than 57 ½ inches from the bottom of your heels. That’s the cabin area of those riding in a Cessna Citation CJ1, which together with its predecessors, comprise the most populous model — by far — of business jet in the world

The oval cabin has seats for five passengers. Up front is a mini-pantry with a coffee dispenser; in back, a compact lavatory. The space is roughly equivalent to a large family van, and while quite comfortable, the jet is short on glamour and luxury

Rather, the Cessna’s popularity, along with that of its close competitors, centers on another data point: 3,250. That’s the number of feet of runway required for the aircraft to accelerate to flying speed and take off or, should something catastrophic occur, slam on the brakes and still have pavement remaining.

That figure — 3,250 feet — means business aircraft can alight on any of the 5,000 or so public-use airports scattered throughout the nation’s suburbs, small towns and back country, as well as land at small city airports abandoned by airlines decades ago. By contrast, the airlines fly to only about 500 airports, and of those, fewer than 70 get about three-quarters of all traffic.

If two companies are competing for business, the one using a business aircraft can fly directly to one of those smaller airports and get to lunch with the client before the other guys taking the commercial airlines show up.

And the business people with the corporate jet won’t just arrive faster; they’ll also show up better prepared. After all, most companies send teams of people, and in their own airplane they’re free to discuss confidential information or polish up that PowerPoint presentation. What’s more, they can use the phones, their BlackBerrys and the Internet en route. In other words, these jets are offices that move.

Just look at Wal-Mart. That company’s success is due, in part, to its fleet of hard-working, bare-bones Learjets that shuttle managers, executives and sales staff from their headquarters in Arkansas to towns throughout the country. The reliance on business aircraft began with its founder, Sam Walton, flying a small single-engine plane (still the most common type of business aircraft) to scout out store locations.

Here’s another thing: The aircraft and their systems are, for the most part, made here in the United States, by union and non-union workers, in places like Indianapolis and Cincinnati; Wichita, Kan.; and Cedar Rapids, Iowa.

And with their impressive performance and construction, they’re prized throughout the world. In 2007, about half the business jets delivered by American manufacturers went to foreign buyers that paid more than $3 billion for them. Manufacturers elsewhere, including in Japan and Germany, once tried to compete, but they were so utterly trounced by American ingenuity and craftsmanship that they simply gave up.

There are foreign-made business aircraft, to be sure; for example, Citigroup had planned to buy a Falcon, made by the highly regarded French company Dassault. But even those are stuffed with American-made avionics, engines, subsystems and interiors. Indeed, Dassault’s largest plant is in Little Rock, Ark., where some 2,000 workers complete Falcon interiors and ready them for delivery.

Finally, the members of Congress who are so irate about Citigroup’s almost-purchase would do well to remember this: business jets are also widely employed by our government for search and rescue missions, surveillance, medical evacuations and crew training.

Of course, their value as speedy, secure executive transports is also much appreciated and used by high-ranking military and civilian officials, including, yes, many congressmen. A business jet has even served, when the president needs something less than a jumbo, as a diminutive Air Force One.

If you truly need to be there and there and there and back by seven, business aircraft may provide the only way. This is an industry that helps further the country’s commerce and interests — and it deserves a bright future, not a public drubbing.

William Garvey is the editor in chief of the magazine Business and Commercial Aviation.

In looking at the Marquis Jet website and advertising, it does not take long to see references to Berkshire Hathaway - inferring that somehow their loose affiliation with Berkshire makes Marquis stand alone as the Rock of Gibraltar in the sketchy jet card industry that has seen firms like Jet One Jets, Jet Network LLC, and countless others evaporate with millions in customer deposits, and their major competitor: Sentient Jet, undergo their share of…ahem…financial problems.

SO - how secure is Marquis?  Tough to tell since their ownership and capital structure is clear as mud, but one thing’s for sure: as a standalone company, they are unique from the other ‘fractional card’ companies…and that’s not necessarily a good thing.

Flexjet is owned by Bombardier.  CitationShares is owned by Cessna.  And they also own their card products.  This means that when you buy a card from them, you are essentially buying a smaller fractional share - at a premium due to the closed-ended commitment that a card offers.  No more no less > you are buying from the supplier.

But Marquis Jet Partners operates very differently: they are a totally different company, separate and distinct from NetJets.  Their model is to purchase fractional shares from NetJets and then splice the shares out in 25-hour increments to their customers.  What does this mean? If business slows -as it has for all of the fixed-rate programs- who exactly is on the hook for the oversubscribed fractional shares? 

Clearly Marquis had a string of very, very good years…and one or two bad years is not by itself going to break the firm.  They are a good company and good people.  The same could be said for some of the big investment banks…it would have been tough to imagine one rough year negating the gains from so many great years. 

It took something supernatural (like oversubscribing at the top of the market to WAY too much of an asset base with a plummeting market value and limited takers on the buy-side) to topple the guys like Lehman over.

In tough economic times, Marquis Jets chooses to stick it to the ultimate
“Captive Audience” - their cardholders

As of this writing, the cost of a barrel of oil sits at about $55 and change, and the cost of a gallon of Jet-A costs $4.88 on the national index, yet to look at Marquis’ fuel surcharge, you would think that we are threatening the simultaneous invasion of Kuwait, Saudi Arabia, Venezuela and the United Arab Emirates, mourning the untimely death of Alaska governor Sarah Palin,  forecasting another Hurricane Katrina, and preparing for the Obama administration (well…that part’s true).

Today, Marquis’ fuel surcharge runs over $2,000 an hour for a Citation X, and $1,000 an hour for a Citation Ultra.

Seriously, these guys should be investigated for unfair and deceptive business practices.  Their reaction to a downward business climate, where their new card sales are at or near an all-time low?  Ream out their existing cardholders -as captive an audience as you will ever find, with no ability to cancel a card- with a fuel surcharge that has barely -if at all- budged since the peak oil and jet fuel prices of this summer.

It strikes me as incredibly intellectually dishonest to charge an exhorbitant fuel surcharge with gas at a buck ninety nine a gallon at the 7-11 down the street. 

If anyone saw the ridiculous insert in yesterday’s WSJ, it is clear where the excessive margins are going - to more crazy, over-the-top marketing, which only masks the problem.  Kinda reminds me of the Mac commercial where the Micro-tard keeps investing big dollars in marketing to cover Vista’s weaknesses, instead of fixing the problem.  

For my money, these guys owe their members a HUGE apology, and should take whatever marketing dollars they have and rebate their members accordingly, with a personal letter of apology from Kenny, Harry and Ken.

With all that is going on, it would be cliché to make a reference to our economic crisis and to apply it to flying privately.  The truth is, from all that our clients tell us, two factors are more important than ever: value and trust.  

When we pioneered our “Jet Hedging” program, nobody could have foreseen today’s climate, though the model is now more relevant than ever.  By working with clients to determine the best value (in terms of cost and aircraft quality) for every individual mission, we have turned the “jet card” and fractional markets on their head, and helped our clients save millions of dollars.

For example, on the high-density Northeast to Florida corridor, we recently introduced the Palms Jet Pass, offering guaranteed access to a 2007 Hawker 400XP for just $10,000 plus tax one-way between any Metro NY and South Florida airport.  http://regentjet.com/palms    This essentially offers “empty leg” pricing on a guaranteed basis, on the best light jet in the skies.   None of this works without earning our clients’ trust.  We have built Regent Jet one client at a time with a maniacal focus on delivering outstanding experiences on premium, late model jets.   Our approach of treating people the way that we would like to be treated ourselves has enabled us to grow in a consolidating marketplace with legions of happy satisfied clients who refer their friends and families to us.  Clearly our way of doing business is gaining traction.  You may have noticed us in the WSJ, on CNBC, or in the New York Times in recent months discussing trends among high net worth clientele – with the consistent message that people are now, more than ever, looking for value. From Jet Hedging to our new Palms Jet Pass program, we believe that we are on the cutting edge of new, value-focused concepts in private aviation.

Fellow Entourage fans will agree that this week’s episode goes down as one of the all-time best.  The episode was capped by Ari Gold jetting off to Switzerland on a G-450 (to the tune of a quarater of a million dollars, based on the Marquis rate of $17k an hour)

More product placement genious from the boys in NY who brought you the $6k an hour Ultra.

Been a while.  To bring everyone up to speed with some random thoughts:

1) The sky is not falling and people are still flying, albeit a little more cautiously with a serious awareness of value.

2) We launched the Palms Jet Pass last month, are gaining a ton of traction, and taking away serious marketshare from Jet Card and FRAX guys on their bread-and-butter routes.

3) Sentient and Jet Direct officially divorced.  Jet Direct had a major presence at NBAA last week, and struck a very conciliatory tone for the way the punks at Sentient have done business and wrecked their company.  Their message: “we are open for business”

4) Quick industry poll open to any and all Part 135 operators: has Virgin Charter ever actually booked a trip?   Please respond.

5) Great quote from one of the Marquis guys last week to describe his business: “Flat is the new up”

6) We opened a new sales office at Farmingdale (inside SheltAir) to help keep up with demand for our new Palms program.

7) Conspicuous in their absense at NBAA: Sentient nowhere to be seen

…more later….I’m back.

The ongoing saga of Sentient keeps getting stranger and stranger.  A day after announcing that instead of restructuring (as previously reported) they are going to can the whole merger, the FAA issues a subpoena to Sentient Jet Holdings’ leadership. Check out today’s AIN article - unclear if the FAA’s subpoena goes after the “new” Sentient or the “old” Sentient.

Check out the August 1 in-depth article on Sentient’s cash woes. 

The article paints a fairly rosy picture, continuing to pin the firm’s troubles on “integrating multiple billing and accounting systems” from the Sentient / Jet Direct rollup, rather than a fundamental problem with massive overhead in a time of slumping demand, paying top-dollar for a bunch of 135 operators at the peak of the market (kinda like CMGI and Softbank with their whole dot com rollup circa 2000 / 2001), a flawed demand model that encourages adverse selection among their most valued clients, and a crippling debt load after being shut off by so many vendors and erstwhile partners.  

For all of the operators, catering companies and other good mom-and-pop firms who are owed massive amounts of money, here’s to hoping that this is just one big accounting snafu.

Check out this July 29 article on Aviation International News (AIN) - while most vendors have been tight-lipped about Sentient’s debt load and creditworthiness, AIN originally reported that an XOJet representative confirmed at a NetJets vendor meeting recently that Sentient Flight Group is still past due - despite earlier assurances that the firm was shoring up its finances.

More interestingly, the article has been re-drafted several times - in the first version they indicated an eye-popping amount of money owed to XOJet, in the second version they indicated an outstanding debt to XOJet, but removed the precise amount.  Next they removed the XOJet reference all together, ….now as of July 31, their adjective in describing Sentient’s current state has changed from “cash strapped” to “operationally troubled” - methinks the next step is to announce the closing of a huge round of funding without naming the investors.

After re-reading yesterday’s article about the confirmed rumors of Sentient Flight Group’s liquidity problems, I am (sincerely) confused….and I must be missing something.  

Earlier this month Sentient put out a release crowing about having > 3,000 active members.   If we take a conservative approach and estimate that the average member has $75k on account, that’s over $225 MILLION in customer deposits that Sentient is sitting on….yet Sentient is WAY past due with several vendors (to the point of being refused service, according to some), and needed a cash infusion, presumably to keep the doors open.  

SO - if Sentient could not pay it’s bills, where is the $225,000,000?   Isn’t this EXACTLY why Sentient says they need all of those deposits - so they can pay every vendor on-time and never go into hock for a flight?   

I would love it if someone could shed some light.

Today Aviation International News (AIN) broke the story of some serious issues at Sentient Flight Group.  Excerpts below (for the full article, click HERE)

Sentient Jet Holdings, parent of Sentient Flight Group, today revealed that its financial backers have agreed to provide a new supply of funding to help the charter, aircraft management and jet card firm continue growing and address a cash-flow problem that has resulted in delayed payments to vendors. Sentient also revealed that Gregory Campbell, Sentient’s chairman of the board of managers, is assuming the role of CEO. Former CEO Steven Hankin will continue in a full-time position, working in an advisory role to Campbell and also leading some strategic initiatives.

Sentient’s cash-flow problems come at a time when the charter industry is under pressure. (See “Charter Industry Changes May Have Significant Effects” from yesterday Charter revenues have dropped in the U.S. by between 10 and 25 percent compared with last year, according to Joe Moeggenberg, president of ARG/US. Sentient’s charter, aircraft management and jet card businesses, according to Campbell, have not declined but their growth has slowed.

The cash-flow problem stems from the merged company’s challenge in integrating 13 different accounting systems, according to Campbell, all from various entities that eventually joined to became Sentient.

One of the most significant developments of 2007 in the business aviation industry was the merger of Sentient Jet Membership and Jet Direct, which had executed a classic roll-up of several blue chip Part 135 operators.

The benefit to the combined company is obvious: control over supply eliminates many of the inherent risks in Sentient’s demand (Membership) models - in addition, the company gains an additional 10 - 15% of excess margin from the operator side every time they fly their own aircraft.  Therein lies the rub.

Think about that: every time Sentient flies one of their own jets, they make an additional 10 - 15% than if they source an aircraft from out of their network.  It’s no wonder that they are anxiously pushing traditional on-demand jet charter in addition to their Membership model - driving margins like that, they should be looking for every channel under the sun to get planes in the air and capture their version of the “dealer holdback” which is so well-known in the auto industry. 

While this is great news for Sentient and their shareholders, it is not such great news for their customers.  

As any seasoned client knows, the primary reason that you do not charter directly with an operator is that they are not client focused, they are aircraft focused - in other words, they do not work with their clients to source the best aircraft for each mission….they push whatever aircraft is ‘on the lot’ and try to make it work for every mission.  This is a BIG distinction when you consider the financial incentive that Sentient has to put their clients on a Jet Direct aircraft with the additional 10-15% margin.

The problem is exacerbated by the total lack of control that Sentient’s clients have over their aircraft make/model.  For example, if a Sentient member wants the least expensive non-stop one-way from NY - SF, they would naturally opt for “Select Large” and pony up for about $50k.  In Sentient’s model, there is nothing stopping the company from putting that client on a Hawker 1000 (which retails for about $30k for this leg) - and to add insult to injury, pocketing the 15% operator holdback, in addition to the $20k gouge.

Historically, this wasn’t always the case.  When Sentient was just a broker, they may have had a mild incentive to select one aircraft over another, but they did not have the additional leverage points of a) wide variances in each aircraft category, and b) a clear-cut financial incentive to “put” an aircraft to a client to make an extra buck…not to mention hundreds of aircraft owners hungry for charter revenue.

We believe that while this model may be bottom-line friendly, it is certainly not customer-friendly. 

How Much Does Marquis Jet Cost?   It’s a fair question, but relatively tough to figure with their ever-changing fuel surcharge, and funky tax calculation. 

We’ve cracked the code.  Below find the Marquis Jet Price Chart as of April 2008

Citation V Ultra: Card plus tax = $131,000 plus $1,100 fuel surcharge = $6,340/hr
Hawker 400XP: Card plus tax = $135,500  plus $1,075 fuel surcharge = $6,495/hr
Citation Excel / XLS: Card plus tax = $184,500  plus $1,360 fuel surcharge = $8,740/hr
Hawker 800XP: Card plus tax = $199,000 plus $1,350 fuel surcharge = $9,310/hr
Citation Sovereign: Card plus tax = $228,000 plus $1,400 fuel surcharge =$10,520/hr
Citation X: Card plus tax = $245,000 plus $2,100 fuel surcharge = $11,900/hr
Gulfstream G-200: Card plus tax = $275,000 plus $1,700 fuel surcharge = $12,700/hr
Falcon 2000 EX: Card plus tax = $315,000 plus $1,700 fuel surcharge = $14,300/hr
Gulfstream G450: Card plus tax = $360,000 plus $2,600 fuel surcharge = $17,000/hr

What’s a discerning private jet traveler to do who wants to spend the summer in Europe, but will only fly a) non-stop, and b) in a 10-year-young aircraft Gulfstream or Global Express 

The options are tough:
1) - Pay well north of a quarter-million with Marquis for a G-450 (if the will even do such a flight)
2) - Play the empty leg guessing game and hope that a late-model non-stop aircraft becomes available
3) - Work the charter market and pay for a pair of round-trips
4) - Partner with Regent Jet in a innovative trans-Atlantic one-way program

Custom designed for our client - we booked a beautiful 2002 G-450 for our client’s round trip, pricing the trip “at-cost” (in this case, approximately $180,000).  The client’s “win?” - guaranteed lift, with some serious upside: we are splitting the profits of the first empty leg to sell, representing upwards of an additional $30 - $40k in savings.

In our experience, there are myriad different angles to work on our clients’ behalf to drive down the cost for discerning travelers to fly privately.  Clients at our level are not leaving the lifestyle - they are just looking for opportunities to tighten their belts a little, and whenever we can help deliver value versus the expensive, monolithic and closed models of Marquis and others, the more we will help our clients ride out this economic cycle.

Let’s put together some more of these wins.

Got an email yesterday from a blog reader asking “why so angry??”  On second thought, we are really misunderstood -   it’s not all about bashing Sentient, Marquis, NetJets, and others.  In the spirit of goodwill, here are some of the flights that we have recently helped our competitors “win”

• Port Angeles, WA to Boise, ID (one-way) on a premium heavy jet (G-IV) with less than 14 hours’ notice
• Scottsbluff, NE to Casper, WY (one-way) on a super-mid (Citation Sovereign) with 12 hours’ notice
• Grand Forks, ND to Billings, MT (one-way) on a Challenger 604
• Rochester, MN to Green Bay, WI (week-long round trip) on a Citation X
• Philadelphia, PA to Burlington, VT (one-way) on a Citation Ultra

Much love

From their website: “At Sentient, we understand that no two trips are alike” - we couldn’t put it any better, because at Sentient, no two planes are alike.

Obviously our business model is disruptive, and one of our clients asked his Sentient rep about our company (more out of curiosity than anything else).  Beyond slamming me personally, his response was typical: “It’s not all about the price.”   Of course it’s not, and it’s a good thing..because if it were, anyone charging $9,450 per hour for a 34 year-old Gulfstream II-B, with the audacity to tack on a fuel surcharge, would be laughed right out of the industry.   So if it’s not about price with Sentient, what’s it about?  

Consistency?  An oxymoron.  Today a CJ2, tomorrow a Premier, next week a Hawker 400XP, next month a Lear 31A – all in the “preferred light” category.

Quality?  You are going to get decent lift, no doubt about it.  Above is a picture of a G-II-SP, circa 1978 that is used as part of Sentient’s extended network.  It will get you from Point A to Point B – (but a little ghetto for over $10,000/hr. -the plane is currently on the market for about $2.5MM)   

Safety?  For sure, Sentient has a strong safety program…but certainly not light years ahead of the curve.  Most folks have an ARG/US rating these days.  

Value?  11 hours in a Hawker 1000 and your initial $100k deposit is out the window.  Put another way: fly from NY to LA on a Hawker 1000, spend a couple of weeks there, and come back and you don’t have enough hours to take a one-way to Florida.  

Sentient overall value proposition is all about convenience and reliability.  Pick up the phone, and in 10 hours they will have a decent aircraft for you, no questions asked.  Fundamentally, Sentient is good, reliable transportation for a massive premium over the rest of the market.  There is clearly a place for them in the market - I’m sure someone thinks $10k an hour for a 30 year old plane is just fine!

My son Matthew’s first flight - excited to be on a beautiful Challenger 604.  Great flight, great crew - awesome day in NYC.

The roll-up of seven Part 135 certificates, and the influx of supply from what’s left of TAG Aviation is not enough for Sentient to guarantee timely lift to their clients on peak days.

Imagine hitting the slopes one last time in Aspen on President’s Day and receiving a call from your Sentient rep, informing you that your flight has been bumped from 1:00 to 4:00  - - or worse yet, missing that last dinner in Nevis because your flight has been pushed up from 8:00 to 5:00.

In a recent e-mail from Sentient, travel card members were informed about the new Sentient peak-period policy: in addition to paying a 5% peak period surcharge, and on top of an eye-popping rate increase (more on that later), your flight times are not even guaranteed.

From an outsider’s perspective, it is surprising that all of the added size and scale of Sentient management program is not translating to added customer value.   Quite the contrary, it is becoming clear that as Sentient grows, profitability will not come from increased supply-side efficiencies, but rather from squeezing more juice out of its base of cardholders.

Sentient Member upgraded from a boring midsize (Lear 60, Citation Excel or a Hawker) to this beautiful Challenger 604 for one of his flights and still saved 30% on the whole package

Longstanding Sentient member recently flew with Regent Jet from Morristown, NJ to West Palm Beach for a four-day weekend.

Sentient “Preferred Mid” rate for both legs: $36,446 including taxes and fees

Regent Jet sourced a 2002 Challenger 604 (10 passenger heavy jet) for the outbound flight, and a 2001 Lear Jet 60 for the return, for $24,810. 

Net savings: $11,636 (over 30%!!!) for an upgraded flight (from a likely Citation Excel or Lear to a Challenger 604) and a comparable flight (on the Lear 60).

Sentient is still like a box of chocolates…you never know what you are gonna get -but it’s more like a box of Russell Stover - not Godiva

More and more, clients are telling us that Sentient is a very good private jet “utility” - depending on a route, their prices can be okay (or totally out of whack), but more interesting is their selection of aircraft.  See below post on the topic.

Sentient has a very simple grid of “Light, Mid and Heavy” in an older or newer class of aircraft.   Their model is to drive down the cost of supply and drive up margins, which means that their clients get the lowest common denominator.

Net/net, Sentient members generally find themselves on these aircraft:

• Select Light: Lear 35, Citation II, Citation V, Beechjet and Diamond Jets
• Select Mid: Lear 55, Hawker 700, Citation III
• Select Heavy: Gulfstream II, Gulfstream III, Falcon 900, Challenger 600/601

And in the “preferred” class”  

• Preferred Light: Citation Bravo/Ultra/Encore, CJ3, Beechjet 400A, Hawker 400XP
• Preferred Mid: Citation Excel, Lear 60, Hawker 800XP
• Preferred Heavy: Embraer Legacy, G-IV SP, Challenger 604

Don’t get me wrong: all decent planes, but far from the best that the industry has to offer.   Here is a list of some very sexy jets that you will never find with Sentient because they do not fit nicely into their 3×2 grid of aircraft categories (from smallest to largest):

1. Lear 40: great range, airspeed, and very comfortable.  Also about 20% more expensive than the most expensive light jet.  We have not yet encountered a Sentient client who flew on a Lear 40
2. Lear 45: a very useful aircraft: 8 captain’s seats in a comfortable configuration, with a cabin that has “light jet” height.  Sentient can’t get away with calling this a ‘midsize’ and it’s too expensive for their light category.
3. Hawker 1000: an interesting early “super mid” - larger than a Hawker 800XP with greater range (and about the same cost from a wholesale perspective), it was discontinued around 1995.  This is a terrific aircraft (and one that we use extensively for our clients), but because of the age of the Hawker 1000s, Sentient can’t charge the “preferred” premium, so the aircraft is not used.
4. Falcon 200: another early “super mid” - same story as the Hawker 1000.
5. Falcon 50: launched in the early ’80s and discontinued in the mid ’90s, this aircraft features a stand-up cabin, transcontinental range, tons of luggage capacity and seating for 9.  Some call it a mid, some call it a super mid, and others call it a heavy.  It is priced as a super mid, and because of age Sentient can’t get the “preferred mid” premium, so Sentient punts on this terrific aircraft.
6. Citation Sovereign: New super mid with tons of cabin room and transcontinental range.  Unfortunately, the wholesale charter rate on this jet is too much for Sentient’s economics, so the jet is excluded.
7. Citation X: The hottest business jet on the market, flies almost at the speed of sound.  Why would Sentient, a company that charges by the hour be interested in a fast plane???  They aren’t.
8. Gulfstream 200: See below post on how we helped a Sentient member upgrade on a peak day at the same cost as one of the above (boring) planes.  Another awesome super mid that Sentient does not fly.
9. Challenger 300: same as the G-200…another awesome plane that doesn’t fit nicely into Sentient’s program
10. Global Express, Gulfstream V, G-550, etc. - too premium to be lumped into the same category as a Challenger 604 or Embraer Legacy

As Bill Belichick would say, “It is what it is”….and you get what you get. 

Sentient Fuel Surcharge has just increased / data as of December 15, 2007 

According to several of our clients, Sentient has changed their fuel surcharge schedule.  Interestingly (and, in our opinion appropriately), Sentient Jet is now charging a higher fuel surcharge for “select” (i.e. older) aircraft than for their “preferred” category.

Select Light Jet: $450/hr
Select Midsize Jet: $550/hr
Select Heavy Jet: $690/hr

Preferred Light Jet: $425/hr
Preferred Midsize Jet: $520/hr
Preferred Heavy Jet: $650/hr

Their overnight charges remain a bargain at $500/night for light and midsize jets, and $1,000/night for heavy jets

Interesting article hit today’s AP Newswire.  Apparently a portion of Michael Vick’s $1M pledge for the care and feeding of his dogs is going to charter a private jet to send 22 animals to “Best Friends” - a no-kill shelter in Utah.

In an earlier post we wrote about OneSky Jets’ (OneSky Pets?) new specialty in transporting dogs (sans owners) in private jets.  Unclear if the shelter used OneSky for this mission.  

It appears that David Lovely (still listed on OneSky’s website) has started a lead referral source called Private Jet Network. 

David Lovely flipping deals 

Sentient is supposed to be the right solution for it’s members on peak days.  A Sentient Member looking to fly home to Dulles from Aspen on New Year’s Day was upgraded to a brand new Gulfstream G-200 for the same price as he would have paid for a Lear 60 or Slowtation Excel

In our “Guide to Private Jet Hedging” report, peak days when everyone is going in the same direction (e.g. most travelers are trying to fly from Aspen to the Northeast on New Year’s), programs like Sentient are supposed to offer the best deal in the sky.   Today’s flight validates the power of empty legs as a viable tool even on peak days.

Here’s the scenario: a Marquis Member had to move his extended family of 7 from Spokane, WA to Boise, ID for a weekend getaway.  Total flight time: 1 hr.   Cost with his Hawker 800XP card: approximately $8,500 for each one-way. 

Good news all around, and the client got the deal of a lifetime - something the charter market could never touch.

Cool piece in the WSJ about high net-worth individuals chartering private jets for their pets.  What’s even cooler is that OneSky seems to be specializing in capturing this burgeoning marketplace.  Can’t wait to see what Greg and his visionary team will come up with next

Sentient is like a box of chocolates…you never know what you’re gonna get

Book a heavy jet and Sentient can put you on an awesome Gulfstream IV…or a 30-year-old G-II.  Start your trip on a decent Beechjet 400, and fly home on a Citation I, circa 1980.   And the worst part is…you never know until a few hours before your flight.

While Sentient Jet Membership is a reputable company with access to some quality planes, their service comes at a price: it’s up to their supercomputer to tell them (thus, you) which aircraft they can do a trip on to maximize their profit. 

With pricing set at the highest common denominator, and a computer algorithm designed to source lift at the lowest common denominator, the system is gamed for Sentient members to take the bullet.

The resounding feedback that our office receives is that the pot-luck nature of their service makes it a true last resort for more and more discerning customers.

The Forrest Gump reference is actually not mine - it comes from a well-known oil industry executive, who still spends about $100k a year with Sentient when all other options fail.

 Check out this article on John Caron’s Otto Club, based in the Boston area.  Like the jet industry, there are plenty of characters in exotic car leasing and rentals - you have to know who you are dealing with.   John runs a good, clean business, and is rumored to be expanding into several new markets in 2008. 

John’s club has access to several Ferraris, Maseratis, Aston Martins, a Bentley and even a Lamborghini Gallardo Spyder. 

Just a couple cool pics of our World Champion Boston Red Sox aboard John Henry’s private jet en route to the All Star Game this summer (it’s a very nice Falcon 900)

Accused of “Unfair and Deceptive Practices and Unfair Competition”

“Misrepresenting itself as an air carrier”  

In a cease & desist and consent order with the DOT dated June 4, 2007, OneSky Jets, a New Hampshire-based jet charter broker (similar to Blue Star Jets) settled its longstanding dispute with the US Department of Transportation.  Standing accused of “unfair and deceptive” business practices, OneSky Jets was able to settle for $50k (with half suspended for a year, provided that OneSky Jets cease and desist from this type of behavior).

From an industry perspective, it is refreshing to see that the appropriate regulatory bodies are calling out the bad seeds (see an excellent piece by Karen DiPiazza “When Brokers Go Bad” - which actually quotes the founder of OneSky Jets before this consent order was issued).   Ironically enough, a key member of OneSky Jets’ executive team is an alum of Flight Time (the primary bandit in DiPiazza’s piece).

In its complaint against OneSky Jets, the DOT alleges the following:

…sounds pretty shady to me

Bombshell - Sentient ain’t all it’s cracked up to be…

Sentient Jet Customer Saved From Gouging

By their own math, Sentient Jet is gouging their members on their most profitable trips…we just never knew by how much!

Regent Jet recently flew a Sentient Jet cardholder on a 4-day trip from San Francisco - Savannah - Augusta - Alabama and back to San Francisco on a Lear 55 managed by Sentient Flight Group (Sentient’s jet operator arm).  The price (before tax) paid by the customer was $45,000.

Regent Jet price: $45,000.  Sentient Jet Member price: $56,940.  Sentient is charging their own member $11,940 (21%) MORE than he paid with us, flying on Sentient’s own jet. 

So much for Sentient’ Jet’s stated mission to bring incremental value to its members by swallowing up all of these operators.  Looks to us like they are using their newfound size and scale to stick it to their customers like never before.

Greed is Good

Marquis Jet Peak Period Days 2007 & 2008 

A consistent value-add of Regent Jet is sourcing lift for Marquis Members on peak period days.  This is for two reasons:

1) Marquis reserves (and exercises) the right to bounce around schedules up to 6 hours on Peak Period days - unacceptable for most members - imagine getting a call the night before your last vacation day telling you that you have to get to the airport at 7:30 a.m. for your flight

2) Last-minute trips invariably come up during Peak Period Days

Marquis Jet Peak Period Days - November 2007 - March 2008

November 20, 2007 - Tuesday Before Thanksgiving
November 21, 2007 - Wednesday Before Thanksgiving
November 25, 2007 - Sunday After Thanksgiving
November 26, 2007 - Monday After Thanksgiving
December 26, 2007 - Wednesday After Christmas
December 27, 2007 - Thursday After Christmas
January 1, 2008 - New Year’s Day
January 2, 2008 - Wednesday After New Year’s Day
January 6, 2008 - Sunday After New Year’s Day
February 14, 2008 - Thursday Before President’s Day
February 15, 2008 - Friday Before President’s Day
February 18, 2008 - President’s Day
February 19, 2008 - Tuesday After President’s Day
February 24, 2008 - Sunday After President’s Day
March 9, 2008 - Sunday Near Spring Break
March 16, 2008 - Sunday Near Spring Break
March 20, 2008 - Thursday Before Easter
March 23, 2008 - Easter Sunday
March 24, 2008 - Monday After Easter
March 30, 2008 - Sunday Near Spring Break

Our client, a healthcare industry mogul from South Florida, owns a jet and also carries a Citation Sovereign card with Marquis Jet for supplemental lift.   This week he is taking a 5-day trip from South Florida to Seattle, WA.  

The Marquis Jet price for this trip using his Citation Sovereign is approximately $104k.  In one of our most successful private jet hedges yet, we sourced an immaculate 2006 Gulfstream 200 for $67,200, representing a savings of over $35,000 on an upgraded jet.

Pictured below - the Gulfstream 200 provided by Regent Jet

Terrific win for a Marquis Jet cardholder (owns a Citation XL card) - 10-day trip from Colorado to Florida over the holidays.   He wanted to upgrade to a Citation X to make the trip non-stop.  With interchange fees, fuel, etc. the Marquis price was approximately $80k.    We sourced two Citation Xs for the trip (one on each leg) for $52,800 all-in, representing a more than $27,000 savings on the same aircraft.

Pictured: the Citation X that we booked:

Huge win for a new member today.  A gentleman wanted to fly from Naples, FL to LA for a weekend shopping trip on a ‘preferred mid’ through Sentient.  Estimated total flight time: 10:15 - estimated Sentient price: $54,900 plus tax (likely on a Lear 60 or Hawker 800XP).

Regent Jet options: a pristine 2004 Lear 60 for $44,500 plus tax (a full 10 grand less for the same plane), or a 2004 Gulfstream G-200 for $49,500 plus tax (5k less for a huge upgrade).  

Realizing he is playing with house money, our Member took the G 200 and kept 5 grand in his pocket to take his daughter shopping on Rodeo Drive.

HBO’s hit show Entourage featured an ‘Apprentice-esque’ product placement showcase for Marquis Jet Partners.  In the episode, Vince, Eric, Turtle and the gang are stranded at LAX on their way to the Cannes film festival, and decide to hitch a ride on Sydney Pollock’s G-400 through Marquis.  Long story short, the jet doesn’t work out, so they end up on a BBJ with Kanye West (notwithstanding that this trip would be north of $400k through Marquis).

 From a marketing standpoint, my company had a front-row seat to see the impact.  Many of you know that we buy the top-slot ranking for keyword searches on “Marquis Jet,” and within minutes of the episode, we had spent thousands on clickthroughs to our website.  Turned out to be a completely unexpected boon - more opportunities than my sales team can handle.   What a way to start the week.

Just read this terrific piece in the Helium Report. As if peak period days, adverse selection (a/k/a “Private Jet Hedging”), and declining marketshare weren’t enough for our friends at NetJets, FlightOptions and FlexJet, owners are turning to the secondary market to dump their shares and excess hours, effectively doing an end-run around the remarketing fees that these programs assess.

Every day I talk with another fractional share owner who is dramatically under-utilizing his share of 50, 100, 150 hours per year.  Think about it: these are 5 year long commitments - a lot can happen in 5 years…families change, businesses are bought and sold, lifestyles change, fortunes are won, lost and won again - yet fractional jet owners are locked into iron-clad contracts. 

The next frontier of this industry is developing a financially sensible solution for these people to get out of their shares, dump excess hours, and to lower the barrier to entry below the inflated pricing charged by Marquis Jet, and the associated fractional cards.  

We will be players in this market.

The latest copy of Business 2.0 lists ”The Next Disruptors - 15 companies that will change the world” - front and center is the private jet industry’s most overhyped story of the decade: Virgin Charter.  

Virgin Charter has the novel approach of linking air carriers together to cut down on empty legs, passing a savings on to end customers, and ultimately bringing new consumers into the private jet category.  Virgin Charter thinks that the industry needs an Priceline.com.   I think this industry needs a return to the old-school travel professional who knows their business inside and out.

Here is why this model, which mirrors that of companies like OneSky and Jets.com, is fundamentally flawed:

1) Flying privately is an expensive proposition, and consumers who have not yet bought into the category are inclined to be incredibly price sensitive.  While the dollar amounts are high, the relative margins for intermediaries like Virgin, are quite slim.  The rule is simple: The sales, marketing and customer service cost to acquire low-frequency, low-margin customers will ALWAYS exceed their lifetime value.

2) The biggest myth in this industry is the empty leg at a fire sale price.  Candidly, the only empty legs that I have ever seen at a screaming good price are the ones that my group sells.

3) High value customers do not want to buy through a website, and they do not want to buy from some 20-something year-old-kid in a reservation center.  (For that matter, they don’t want to be sold to like they are buying a penny stock from JT Marlin either).  The right customers in this industry want great service, quality aircraft, fair pricing, and above all, good people.   It’s not about finding the cheapest Lear 35.