ARE YOU FLYING WITH A FIDUCIARY…OR ARE YOU FLYING BLIND?
By Justin Sullivan
For many high net worth families and closely held companies, private air travel is the largest discretionary expense, year in, year out.
Membership Clubs like WheelsUp, and Jet Cards like Sentient Jet Membershipoffer a lot of predictability but usually at the “highest common denominator” hourly rate, with big up-front financial commitments.
These programs work for some travelers, but for others, and some missions in particular, charter makes a lot of sense to consider. But chartering a jet can be…messy.
YOU DON’T KNOW WHAT YOU DON’T KNOW
The marketplace of air charter brokers and agents is largely unregulated, and our readers report some shark-infested waters with even the most cutting edge of booking apps.
There are many variables to consider, including the size of the jet, destination, services included and more. Operators have varying safety records, and planning a trip can be confusing and complicated (not to mention deadhead fees, fuel surcharges, landing fees and other expenses).
Many travelers turn to agents, or Charter Brokers, to help them navigate the complexities of private air travel. Certainly Brokers can help you find the right flight, but the fees they charge can be significant.
EXPENSIVE ADVICE
However, in a marketplace where the average transaction size is north of $20,000, their ADVICE can be even more expensive.
I spoke to Justin Sullivan of Private FLITE about how his company is helping high net worth individuals to save thousands every time they book private air travel, without having to tie up a lot of capital in a jet card or ownership scheme, and without flying blind with a Broker.
Sullivan stresses that the traditional system of booking private flights has a lot of flaws. Hearing him discuss his broker life is like a confessional….
“You’re not necessarily being taken advantage of, but you are paying more than you would under my new system… almost every time,” he explained.
Of course, it’s obvious that in almost every industry that there is a large gap between the rates paid by suppliers and the price that retail consumers pay. That’s nothing new. The trouble is just how complex and unregulated the private flight industry is and how challenging it can be to find advice from anyone who doesn’t have ulterior motives.
Sullivan has been a private jet charter broker for 13 years, so he knows this industry inside and out. He was frustrated with the existing system and he wanted to make a big shift.
So, Sullivan upended the typical broker / client relationship and instead began serving as a “fiduciary advisor” for high net worth individuals booking private jets, calling the program FLITE Advisor.
“Everyone in the air charter business is biased and dare I say a little greedy,” says Sullivan, “You (the Jetsetter) need unbiased advice to get the best outcomes.”
Launched to the public yesterday, but tested with “several dozen” Charter Members, FLITE Advisor’s annual subscription of “under $2,500” per year gives Members a “done for you” private jet charter quoting, booking and fulfillment service, with quotes directly from Operators at wholesale rates with no Broker fee or markups.
Members get custom curated quotes for charter flights direct from airplane Operators, sourced through insider systems, databases and message boards of Brokers and Operators. Some of these sourcing systems -such as Avinode- cost $15,000 a year to access.
The service allows customers to access a selection of clear and straightforward quotes to choose from, while avoiding some of the major pitfalls of working with a Broker. Since Brokers can charge up to 10-50% in markups and fees on wholesale flight costs, this has the potential to result in significant savings.
Sullivan points out that one of the main issues with Brokers is how they handle the “Kansas City Shuffle” airplane switcheroo. Essentially, there are huge price changes on private flights in the market every day – and these changes occur even after a trip is booked. However, when a Broker finds a better price on a flight, they won’t pass those savings on to their client – they will invariably keep the extra cash for themselves.
So, if this is the case, why not book directly with operators? Sullivan warns that this strategy is not as easy as it looks either. The secret sauce is in finding the right Operator, and negotiating the best terms.
“First, operators are beholden to their own fleet and it’s limitations, so you’re looking at 1/500th of the market. And with integrated operators, wholesale and retail charters are quoted by different teams with different pricing parameters,” he explains. “Operators will almost never give retail customers the 5% wholesale discount that is standard to Brokers.”
This fixed-fee system eliminates both the “Broker Bias” and the negatives of booking with operators. The way it works is similar to fixed-fee financial services – the client pays one flat rate per year for the best, most helpful, relevant and honest advice the advisor has to offer, free from any fees or commissions beyond an annual retainer.
Not all operators deal extensively with end consumers and novice travelers – banana peels like catering, the need for a flight attendant, rules on pets, understanding how much luggage will fit, operational issues based on weather and crew duty limits, cancellation penalties,escrowing advance payments and so forth can trip up even the most seasoned jetsetter.
FLITE Advisor might just fill that gap. For a nominal “under $200” per-flight booking fee, Members may opt to work directly with a seasoned, professional flight concierge who arranges catering, ground transportation, aircraft positioning messages, facilitates payment, and builds a bridge between Member and Operator.
Members also enjoy wholesale rates with sister program FLITE Air Taxi’s network of 40 Pilatus PC12 executive turboprops. “Members receive 8% – 14% off of our already competitive Pilatus rates for point-to-point travel in the Eastern Time Zone.”
What’s the motivation behind this shift?
Sullivan explained that raking in high commissions when he was a private jet charter broker didn’t feel like “God’s Work.” After an unexpected liquidity event which fueled entry into ownership, Sullivan feels much better when he is serving others in a more honest, helpful and beneficial way while increasing his purchasing power in the industry.
“I built this program to help people like you reduce the suffering of paying retail prices on private charters. I knew that if I could ethically take this pain away, we’d be friends for life. We have so much value to give,” concluded Sullivan.
God’s Plan.