When executives in top-tier corporations in the payments industry travel, they don't fly coach. A chartered jet is one way they get to those important business meetings coast to coast.
Often corporations will buy a fractional, which means partial ownership of a private plane. The advantage of fractional ownership is that it is cheaper than owning a plane outright, while still offering customers convenience and substantial time savings over commercial flying.
A fractional consists of a block of flight hours that corporations purchase, which can easily run into hundreds of thousands, if not millions, of dollars. In a bad economy, with even large corporations closely scrutinizing their expenses for cost savings, tightening up travel budgets is a priority.
Startup private jet service provider InJet LLC has what it considers a unique alternative to the purchase of a fractional in its Touch 10 jet card program. Anthony Johns, Vice President of Sales and Marketing at InJet, calls it a sampler card, where clients purchase 10 flight hours in order to evaluate InJet's service. If they like the service, they can then upgrade to full membership, which comes with larger blocks of flight time. The Touch 10 card is therefore like a rebate card that a retail merchant offers to attract new customers.
"With the card you are really building a relationship," Johns said. "You know that if somebody buys a card from you, whether it's 25, 50, 100 hours, they're committing to allow you to provide them travel services for that extended period of time."
Johns said the chartered private jet industry is a multibillion dollar one. He estimated that only a quarter of that business accommodates vacation travelers - the rest is strictly business related travel. Consequently, InJet's clientele is largely corporate officers and their teams. But the purse strings for corporations' yearly travel budgets are controlled by chief financial officers.
"So for the CFO, it's a budgeting thing," he said. "[The card] gives them the ability to budget out the sales team or the management team or the executive team ... and determine how much he is going to have to invest in travel." Given the state of the economy, charter services' fractional programs are suffering, according to Johns.
"The card is becoming very attractive now because the fractional programs are having a real hard time renewing their customers," he said. "And, on average, probably per [financial] quarter, if you look at all the programs combined, you probably have a good block of about 200 to 400 shareowners coming to the end of their term every quarter."
Returns on investment in fractionals can be low. "The reality is if you're getting 40 percent back on your share investment when it is time for you to term out after seven years, you're lucky," Johns said. In comparing annual multimillion dollar investments in fractionals with InJet's more cost-efficient programs, paying hourly seems like a better way to go, he added.
The Touch 10 card is not a mag striped-enabled device. Due to the size of payments, clients prepay for flight time by wire transferring funds to InJet's banking partner, Lydian Bank & Trust, headquartered, like the charter jet service is, in Palm Beach County, Fla. The bank manages InJet's customer accounts. Clients sign up online, where the information gathered is used to create user profiles. InJet uses that information to personalize flights, such as what kind of car service the client likes to get to the airport and whether that client likes crushed or cubed ice in in-flight cocktails, Johns said.
Through the bank, customers are provided complete account transparency, he noted. They receive monthly statements and can monitor flight activity and how their funds are being distributed to pay for costs, such as flight time, catering and repositioning (flight time in returning a plane to its base position after dropping off passengers).It is only upon completion of the passenger's journey that the bank releases funds to InJet. While the card itself is not a stored-value instrument, Johns believes it is a prized possession nonetheless. "The card is specifically for the member to keep in his pocket," he said. "It's a status symbol for them. They love to talk about who they fly with. They love to flash that card."
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