Talk about inefficiencies: Over the last 20 years, the average private-jet trip carried two passengers and traveled less than 1,000 miles, according to Alex Wilcox, founder and CEO of Irvine, Calif.-based JetSuite. However, he points out, the planes typically seat eight or more and are capable of crossing oceans. "It's kind of like buying a Winnebago to go on a two-week vacation to Yosemite, but then using it to drive to work every day," he says.
In Wilcox's world, smaller is better, in the form of JetSuite's 13 Embraer Phenom 100s, which swaddle four passengers in premium-class comfort. JetSuite took off in 2006 with Wilcox's discovery of the smaller planes, which he sees as the solution to the "broken" $14 billion private-aviation industry. "We saw an industry whose expenses were completely out of line with its costs," he says. "It was using the wrong tools for the job."
The lightweight Phenom, with its 1,000-mile range, is the most efficient jet in its class, burning 90 gallons per hour while other planes suck through 230. With jet fuel priced at more than $5 a gallon--the industry's No. 1 expense--that spread's a game-changer. The fleet of identical aircraft also means that JetSuite's pilots and mechanics can operate and work on any plane, a cost-effective concept adopted from JetBlue (which Wilcox co-founded) and Southwest Airlines.
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The Phenoms and JetSuite's custom schedule-optimization software result in fares that run about half what the competition charges to travel to and from "SuiteSpots" across eight states, including California, New York and, soon, Florida. Unrestricted fares run $3,750 an hour for the whole plane, while off-peak fares on a one-way from, say, Orange County to Oakland, Calif., run $1,999 for four passengers.
That's still hefty, but Wilcox claims it's a good deal, citing a customer who owns shopping malls along the West Coast. "He visits all three of them in a day and is home for dinner. Flying commercial would take at least three days and two nights," he says. "By the time he adds up the time away and the hotels and everything else, we actually pencil out pretty well."
That value pitch is paying off. "Revenue has grown 10 percent virtually every month since we started," he says. From 2010 to 2011, the number of flights per year increased 50 percent to 10,000; passenger traffic rose 60 percent.
Tom Peterson, an aviation-industry consultant and managing director of Minneapolis-based Chartwell Capital Solutions, isn't surprised by JetSuite's success. "Five years ago, there were a whole bunch of people with the same idea, but none of them got to the finish line, never started operating," he says. "These guys did, thanks to the jet, the business model and their team."
That isn't to say JetSuite hasn't learned a thing or two along the way. Originally Wilcox thought the airline would lure first-class travelers from commercial carriers. "As it turns out, we're getting people who already fly privately to fly more," he says. It seems JetSuite turned the cost/benefit analysis that used to go into every private flight into a no-brainer.