Two Miami Private Jet-Sharing Start-Ups Are Delayed For Takeoff

If, at first, you don’t succeed, try, try again. For two Miami-based start-ups hoping to put their own stamp on the shared private aviation segment, getting to the runway has been a series of something airline flyers know about all too well: delays. The pair of entrepreneurs with vastly different backgrounds say despite the ground stop, investors and customers – who, in some cases, have already plunked down up to $90,000 for future flights, are still onboard, seatbelts fastened as they wait on the taxiway.

The Fleet Clubs’ Bernard Schwartz and Zed Aerospace’s Zander Futernick follow in famous footsteps. The Magic City has been a launch pad for some of aviation’s most esteemed pioneers, although not all ventures ended well. Pan Am founder Juan Trippe used Dinner Key as the gateway to South America for his flying boats, while World War I fighter pilot Eddie Rickenbacker built Eastern Air Lines into one of the nation’s largest airlines. Amelia Earhart took off on her final adventure; her attempted round-the-world journey from here as well.

Fleet Clubs, a membership play, expected to launch flights to Islip, Long Island, last December as a gateway to the tony Hamptons. That has been pushed back to the Summer of 2024. Flights to Vail, Colorado, were scheduled to begin in January. Then in January, they were moved to June. Now they are slated for November.

It’s the type of delay Zed Aerospace would envy. After announcing its launch in 2018 with plans to start flying in 2019, it is now targeting Q4 of this year. Zed originally said it would serve Miami, New York, Chicago, Atlanta, Los Angeles and Denver in its first year. By 2020, it was to have been flying to Las Vegas, San Francisco, Seattle, Boston, and Houston as well. Futernick, its youthful founder and scion of a prominent local family, says the inaugural flights will link Palm Beach and Miami with New York. Plans call for a branded experience in the air and on the ground. Routes to Chicago and Atlanta are expected in 2024.

“Zed has an extension of financing for an initial customized fleet,” Futernick says. He originally raised money in part from over 15,000 hopeful passengers, who paid $100 to $1,000 to be founding members. “We are now working with KeyHolders who have asked to be active participants in expanding our initial fleet. Our members have been extremely patient and eager to help in our launch,” he adds.

Like Fleet Clubs, it envisions allowing flyers to use private jet terminals, bypassing crowded airports and arriving up to 20 minutes before departure. Unlike standard private jet charters, jet cards or fractional ownership, you only have to buy a single seat, not the entire airplane, saving money, although Fleet Clubs works on a membership basis. In its case, you buy tickets in bulk. Annual commitments start with a $50,000 check. Both new entrants will operate on published schedules.

Fleet Clubs is a knockoff of similar membership shuttles that fly on a scheduled basis between the West Coast and Hawaii using chartered Boeing 737s. Seats are configured 2×2 and are similar to what you would find in a domestic first-class cabin, but with a bit more space between rows, more recline and leg rests.

Schwartz’s family is a longtime member of one of the shuttles. His partner in Fleet Clubs, Michele Sullivan, manages two of the Hawaii clubs, which is how they met, so there is plenty of experience with over 1,700 flights since 2007. He says it took over two years to get each off those clubs off the ground. Both now have waiting lists.

From the beginning, Schwartz envisioned adding more clubs. During a press conference held at Miami International Airport last week, he said he wants to add a Fort Lauderdale to Newark club, maybe even before the Long Island version.

He also sees a Silicon Valley shuttle from Santa Barbara, where apparently many tech executives decamp. Earlier this year, its website was teasing clubs for flyers traveling from White Plains, north of New York City, to San Juan and Nantucket.

At the time, Schwartz said he was “accepting commitments” for clubs covering Westchester County Airport to Vail and Palm Beach International Airport. Those are all apparently on the back burner now.

With a background in luxury real estate, hospitality and membership clubs, including including 432 Park, The Setai and The Bath Club, Schwartz says getting the right mix of committed members is more important than sticking to a start-up schedule.

In October, he said both the Long Island and Vail clubs were about half sold to its target of 200 members. A press release issued back then quoted Sullivan as saying, “[W]e are on track to sellout Long Island’s membership by year’s end.” Schwartz says nobody who has signed up has backed out and they all have other solutions, so are happy to be patient.

To join, you have to put up at least $50,000 for Long Island, or $90,000 for Vail. That pays in advance for seats which cost $2,100 each for the Colorado flights and $1,250 to Long Island. It also means Fleet Clubs is assured of making money, according to Schwartz. Eventually he wants to charge a membership fee of $150,000 to $250,000, based on the routing, but that’s being waived for now.

That money laid out so far is probably pocket change to the folks who split their time between multi-million dollar second homes in Miami, the Hamptons, Aspen and Vail but wouldn’t mind saving a few bucks when they don’t need the use of an entire private jet. Chartering a six-seat light jet between Miami and Islip runs around $20,000 each way. An eight-seat super midsize jet that can reach Vail nonstop would be about $40,000 each way. You can use your allotment of seats to send the nanny along with Fido or for the grandkids.

During the media event, it still wasn’t apparent that Fleet Clubs has secured an operator for its flights. Earlier this year, Schwartz said they would be using chartered Boeing 737s from Sun Country Airlines. The press invites even stated attendees would tour “the new 737 all First-Class Jumbo Jet operated by FLEET.”

That proved to be incorrect on a couple points. Fleet is chartering, not operating the airplanes for its flights, and the aircraft type is apparently switching along with the operator.

Schwartz says he plans to use GlobalX, which specializes in sports teams and live entertainment tours, as the operator. The Airbus A320 on display for the media is a 16-year-old airliner that originally flew for Virgin America. It had just arrived from Cuba the day before and in the days after flew to New Orleans, Newark, Baltimore and Charlottesville for various other clients of the operator.

It currently has 74 first class style seats in a 2×2 configuration with about eight inches of extra legroom compared to what you would find on a domestic narrowbody airliner. There’s more recline and a leg rest. It’s nice but it isn’t the luxurious interiors portrayed in the marketing brochures. Schwartz says his own planes with custom seats are still a few years off.

Avoiding Major Airports

For all the talk by both Fleet and Zed about luxury partners, lifestyle and branding, the key differentiator is not having to mess with crowded airport terminals. They are both trying to fill the gap between full private jet charters and first class on regular airlines. And to that end neither is unique.

JSX, which has received funding from JetBlue and Qatar Airways, is offering by-the-seat scheduled flights between private terminals. The biggest player in the by-the-seat market, it currently flies nearly 40 regional jets reconfigured for more space. It expects to become profitable on an EBITDA basis later this year, according to an interview with its CEO in the Dallas Business Journal. Hampered before being helped by Covid, it has pushed its target of hitting $1 billion in revenues from 2024 to circa 2028.

There’s also Aero, launched with the backing of Uber co-founder Garrett Camp. It seemingly stops as many routes as it starts, something that apparently is part of its strategy to find the right markets. It is battling on three fronts: Europe, the U.S. West Coast, and now in JSX’s Dallas backyard. Last year it raised $65 million to fund expansion.

Tradewind Aviation, mainly a charter operator, has seemingly found a niche using some of its Pilatus PC-12 turboprop and selling seats on a small network of routes connecting Westchester County Airport to destinations in New England. Last year, it placed an order for 20 more of the Swiss-made airplanes that seat eight passengers.

Meanwhile, Vista Global’s Thomas Flohr may already be the dominant player catering to globe-trotting centimillionaires. His fleet of ultra-long-range VistaJet Bombardier Global jets charter for up to $25,000 per hour. He also wants his share of entry-level consumers. His XO’s shuttles currently run four to six flights a day between South Florida and New York. Seats start from around $1,500 one-way.

There are others attempting to crack the code for by-the-seat private aviation. Scottsdale-based Set Jet has a membership model. Surf Air uses PC-12s on a few routes in California. Los Angeles-based Advanced Air connects Mammoth to several Golden State airports, again using private aviation terminals. Even Blade, known for its helicopter service, runs seasonal by-the-seat flights between New York and South Florida.

Fly Katana, founded by investment banker Bryan Verona, is a website trying to aggregate all of these ventures. It also enables members to form jet-sharing groups. It currently includes flights from Aero, Blade and XO flights.

Whether the market for jet-sharing is more than a footnote is a good question. JetSmarter, which championed the by-the-seat private jet concept, rocketed to a billion dollar valuation before running into headwinds and being acquired by Flohr in 2019.

Wheels Up, which mainly caters to the traditional private jet charter and jet card market, has long pitched democratization. It allows members to join up and split the cost of flights. However, it has bigger issues these days. After going public in July 2021 at $10 per share via a SPAC merger, its stock price is now mired below $1. With mounting losses, last week it notified shareholders it is contemplating a reverse stock split to avoid a potential NYSE delisting.

Still, there seems to be intrigue in the segment. Data from subscribers to Private Jet Card Comparisons, who spend around $290,000 per year chartering the entire aircraft, found 43% are interested in by-the-seat and sharing concepts. Only 6% currently partake in formal programs, yet they do share quite a bit it turns out. Nineteen percent say they catch rides on friends’ private jets.

Warren Buffett’s Addiction

In terms of aviation, Schwartz and Futernick are far from outliers. Jet fumes have long attracted young entrepreneurs and otherwise successful business types.

At the age of 31, in 1971, Frank Lorenzo acquired a controlling stake in Texas International Airlines for just over $1 million. He parlayed it into one of the largest airline groups in the world, acquiring Continental Airlines, Eastern Airlines and People Express, before being chased in out in 1990 after a decade of clashes with the unions.

Howard Hughes owned a large part of TWA from 1939 until 1966, a relationship that ended in litigation stretching all the way to the Supreme Court. In 1970, he acquired Air West and renamed it Hughes Airwest, which was acquired by Republic Airlines, which was bought by Northwest Airlines, which merged with Delta Air Lines in 2008.

Richard Branson founded a series of Virgin-branded aviation companies. His private jet brokerage, Virgin Charter, didn’t last long. He lost Virgin America in 2016, in part due to restrictions on foreign ownership, selling to Alaska Airlines. Both the original Virgin Atlantic from the U.K. and an Australian affiliate have spent time in different versions of bankruptcy, although each are still flying. His Virgin Galactic space tourism play is now in possible jeopardy after a related company, Virgin Orbit, filed for bankruptcy protection earlier this week.

After nearly two decades of trying, in 2021, billionaire Robert Bass threw in the towel on his bid to build a supersonic private jet, despite orders from NetJets and Flexjet, who envisioned selling fractionalized shares to UHNWs and corporations. Bill Gates was an investor in Eclipse Aviation before it ended up in Chapter 7 bankruptcy in 2009. It planned to revolutionize the industry with small jets for short hops where passengers could buy single seats.

EasyJet founder Stelios Haji-Ioannou realized more success than most. The son of a Greek tycoon, he launched the low-cost airline at age 25. David Neeleman started his first airline before turning 30. He went on to launch JetBlue, Canada’s WestJet, Brazil’s Azul and now Breeze. Warren Buffett has held stakes in American, Delta, United, Southwest, USAir and still owns NetJets, the world’s largest private jet operator.

Buffett wrote of the industry in his 2007 letter to Berkshire Hathaway shareholders, “Here a durable competitive advantage has proven elusive ever since the days of the Wright Brothers. Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down.” Ever prescient, in 2009, hamstrung by the Financial Crisis, his private jet airline posted a $711 million loss. Buffett, of course, stuck with it and kept trying. NetJets currently has a backlog of customer orders backed by nonrefundable deposits that stretches well into 2024. He once described himself as an “aeroholic.”

In Sky Gods: The Fall of Pan Am, author Robert Gandt writes that the naysayers and non-believers most motivated founder Juan Trippe. He responded by ignoring them and went create the global travel industry, betting the farm on the jet age with the Boeing 707, then on mass tourism with the first jumbo jet, the iconic Boeing 747.

Whether Fleet Clubs or Zed Aerospace ever takeoff remains to be seen. The siren call of aviation, public, private or something in between, remains strong.