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Private jets are expensive to charter, often costing thousands of pounds. Right now they're mainly used by the ultrarich to get around, but a growing number of apps are trying to reduce the cost.
One of the most prominent private-jet startups is JetSmarter, which uses a membership model and something called "empty legs" to reduce the cost of flying on a private jet.
Business Insider went to the private-jet terminal at Luton airport to meet the company.
Luton has a little-known section that's kept separate from the normal terminals. If you can afford to charter a private jet then you drive into the airport using a dedicated entrance, sit in a VIP lounge, and then drive your fancy car straight up to the jet and fly off to somewhere nice.
Paul Grusevich, JetSmarter's head of global expansion, sits in the corner of the private-jet lounge. He has an indistinct accent that you only get by living all over the world, and the sunglasses to match. We walk through the plush lounge and jump into a car that drives us to a small private jet that's available to JetSmarter customers.
JetSmarter works by buying up "empty legs" from private-jet operators. An empty leg is when a private jet returns from a trip to its home airport, or if it's repositioning to prepare to pick up more passengers. Those flights don't have any passengers — just the pilots and crew.
The company buys empty legs in bulk and offers them to paying members free. It says it gets a "vast" discount on the prices of empty legs but declined to give an approximate amount. Grusevich says it results in a "win-win" scenario for operators as they're able to make money from flights that were, well, empty.
People pay a yearly fee to join one of JetSmarter's three different membership tiers, and that gets them access to the private-jet booking system. The least expensive tier, "access," costs $4,000 (£3,000) a year and has a $2,000 (£1,500) joining fee. It grants you access (funnily enough) to JetSmarter's app, which lets customers book "empty leg" flights free.
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The next tier up is "smart," which lets you book seats on jets chartered by JetSmarter that run regularly scheduled flights, and also lets you charter your own jet. That costs $10,000 (£7,500) per year with a $5,000 (£3,777) initiation fee.
And the most expensive tier is "sophisticated." It costs $40,000 (£30,200) a year with a $5,000 initiation fee but gives you $20,000 (£15,100) of flight credits. Sophisticated membership lets you make four outstanding reservations and you can book seats for other people, even if you're not on the flight.
JetSmarter doesn't make money from individual flights, Grusevich explains. Instead it's all about the membership fees. That helps the company overcome the low margins in the private-jet industry, which has seen several companies shut down. The New York Times reported earlier this year on the death of companies like Blackjet and Beacon, which aimed to make private-jet flights cheaper.
Grusevich, however, sees JetSmarter as very different to other companies that offer similar services. "I would argue that we do not have any direct competitors because there are services out there that only sell empty legs, there are services out there that only give shuttles, there are services out there that only give charters. There is no service that only gives all three," he argues. "Plus we also have a 24-hour concierge service through the app. It’s like a WhatsApp service."
When asked how many people actually use JetSmarter, Grusevich says that it transported a total of 20,000 people last year (which includes people who had seats booked for them by JetSmarter members) and it had 800,000 downloads and people registering through the app.
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Scroll through the app and you'll see a list of all the types of aircraft you can hire. There's everything from a helicopter to get you to the city (JetSmarter offers free chopper rides for some routes on Fridays) and an Airbus passenger plane.
Do people actually charter an entire Airbus through JetSmarter? Grusevich explains that yes, they do: "We sometimes have a CEO of a company become a member and he’s using it for himself. He likes the service so much that when he takes his company on a big outing somewhere, they get an Airbus."
JetSmarter doesn't make any extra money if you charter an Airbus through its app, as it pays the fees for chartering the flight. It's an expensive way of doing business, but the company has some impressive investors. Rapper Jay Z is a backer, as is the Saudi royal family and Twitter's director of product strategy Wayne Chang.
Grusevich says that 90% of the company's investors used the service before investing. And what's it like working with the Saudi royal family? He says they're very helpful: "We reach out to them more often that they reach out to us if we have a cultural question or we ask for a recommendation for a PR company to work with that they’re well acquainted with. That’s the level of involvement, and they’re happy to help."
As well as high-profile investors, JetSmarter has some well-known clients. Kim Kardashian tweeted about it to her millions of followers, which Grusevich says overloaded the company's servers for a while because of the interest it received. But the stunt backfired when it led to headlines like, "Kim Kardashian mocked after telling fans to download private jet app" and "The Kardashians slammed for not disclosing relationships to companies they hype on Instagram."
Celebrities aren't usually paid to promote JetSmarter, Grusevich says. Instead they're usually offered to try the service. That's all part of JetSmarter's strategy for appealing to people around the world who can afford to fly on private jets.
Before expanding to a new market, JetSmarter buys flight data and examines it to see which routes are popular. It also translates its app to the local language and looks at how many downloads it has had already.
The company then hosts and sponsors events that will cater toward people who can afford to join. But even then, JetSmarter is selective about who it wants to be seen using its service. "You have to be very careful. Just because someone is famous doesn’t mean they’re good for our product," Grusevich says.
Don't people hate having to share private jets with other people? It certainly doesn't seem very private, and the tiny jet I was sat in on the tarmac with Grusevich wasn't much more spacious than a normal town car. "It’s a country club in the sky. It’s people who can afford a membership that get to [join]. People actually like talking to each other and getting to know each other. They make friends. Some people — very few actually — in the United States they buy memberships just to network."
Despite its failed competitors, more companies are trying to compete with JetSmarter. There's Victor and Jetwise, and Uber regularly runs promotions for helicopter rides and trips on a private jet. What if it decides to introduce private jets as a service alongside cars? Grusevich says, "Bring it on!"
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Scroll through the app and you'll see a list of all the types of aircraft you can hire. There's everything from a helicopter to get you to the city (JetSmarter offers free chopper rides for some routes on Fridays) and an Airbus passenger plane.
The report is based on customer bookings, enquiries, and flight searches through PrivateFly.
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