A Form 10-Q—a quarterly financial report submitted to the Securities and Exchange Commission— filed by Volato on August 14 showed the company spiraling into the red, recording a net loss of $34.3 million for the six months ending June 30. The same form stated Volato has a negative working capital of $18.2 million and an accumulated deficit of $98 million as of June 30. Net cash used in operating activities for the six months was $7.4 million.

“These above matters raise substantial doubt about the company’s ability to continue as a going concern,” the form stated. “During the next [12] months, the company intends to fund its operations through a combination of issuing debt and equity as well as the sale of aircraft at a premium to cost.”

Additionally, the form stated that management believes that its current cash position will allow Volato to continue as a going concern and to fund its operations for at least one year from the date the financials were made available.

The filing also stated that on June 18 Volato received a notice from the New York Stock Exchange (NYSE) advising the company that it is not in compliance with NYSE American continued listing standards, requiring it to have stockholders’ equity of at least $2 million if it has reported losses from continuing operations and/or net losses in two of its three most recent fiscal years.

Section 1003(a)(ii) of the Company Guide also requires a company to have stockholders’ equity of at least $4 million if it has reported losses from continuing operations and/or net losses in three of its four most recent fiscal years.

Volato stated in the form that the company has submitted a plan to the NYSE American LLC on July 18, outlining actions the company will take to regain compliance by December 18, 2025.

“The notice does not affect [Volato’s] ongoing business operations or its reporting requirements with the United States Securities and Exchange Commission,” the form stated.

‘Rightsizing’

In a company letter from Volato CEO Matt Liotta obtained by FLYING, Liotta explained the decision to “rightsize” the company’s fleet and crew by removing five leased planes and furloughing some of its pilots.

“This is not a decision we take lightly, and it is the first time we have taken such a step,” Liotta stated in the letter. “However, I want to emphasize that this decision is based on our need to align with both the timing of new HondaJet deliveries, in which we have full confidence, and the pace of demand growth.”

In that statement, Liotta referenced Volato’s 2023 purchase of 25 HondaJets from Honda Aircraft company. These jets were slated to be delivered by 2025, but Liotta said delayed deliveries of the new aircraft and lower than expected sales have put financial pressure on Volato.

He also said demand for Volato’s services, while up, aren’t as high as anticipated.

“This situation requires us to make some difficult but necessary adjustments,” Liotta said.

He went on to say that Volato had been working closely with Honda to increase the availability and utilization of Volato’s fleet.

“…We’ve made substantial progress that allows us to fly individual planes more efficiently, meaning we can meet our flight hour needs with fewer planes,” Liotta said. “This not only strengthens our financial position but also benefits our fractional customers by delivering more revenue share to them—a true win-win.”

After attempts to renegotiate Volato’s more expensive plane leases, Liotta said that the company was unable to reach acceptable terms and decided to end those leases. By flying more hours per plane, he said the company aims to enhance its profitability and attract more interest in its fractional ownership program.

“This decision is about managing our business wisely and positioning Volato for long-term success,” Liotta said. “By rightsizing our fleet and crew now, we’re setting ourselves up to navigate these challenges effectively and prepare for future growth. Thank you for your continued dedication and resilience. We will get through this together and come out stronger on the other side.”

Volato lost over $17 million last quarter and currently has $5.8 million in cash. Volato did not immediately respond to FLYING’s request for comment.

Jet It Déjà Vu

Readers may recall FLYING parent company Firecrown owner and CEO Craig Fuller’s article last summer detailing the demise of Jet It, another fractional ownership charter jet operator. 

“Jet It generated revenue through several major sources— fractional-owner hourly fees; monthly maintenance fees; up-front selling of aircraft fractional positions; and off-network charter flights,” Fuller, who was also a Jet It fractional owner, wrote in the article analyzing its business model.

The flaws in this model emerged when Jet It—-contractually obligated to guarantee fractional owners aircraft availability within 72 hours advance notice—was required to go into the charter market and purchase aircraft time at the charter market’s clearing rate. Fuller stated that these rates were often five times the rate that the fractional owner was paying Jet It for the same service.

Additionally, a key driver of Jet It’s cash flow was in selling fractional aircraft positions—especially during the start of the pandemic.

“In the early days of COVID, as interest around personal aviation exploded, so did cash flow opportunities for Jet It,”  Fuller wrote. “In fact, it is likely that the company relied too heavily on this source of cash to fund its operations.”

Fuller wrote that in 2021, and 2022 supply chain issues started to impact Honda Aircraft Company, and Jet It could not source as many airplanes to sell to members. This caused cash flow from new fractional sales to dry up, severely impacting Jet It’s business model.

Jet It closed down on May 24, 2023.

The post Volato to Drop 5 Leased Jets, Furlough Pilots appeared first on FLYING Magazine.

I can honestly say our stories captured millions of reads from pilots and aviation enthusiasts over the last 12 months, both for our digital-only news and enterprise reporting, as well as the print features we brought online to share with the world.

Being the stickler for detail I am, I waited til the last second ticked over on the year before diving in to see what scored highest—and here are my select 7 of those stories and why I found them compelling.

Boeing Bird of Prey Shrouded in Secrecy Still

Jason McDowell, a mild-mannered private pilot from the Midwest, consistently entertains and intrigues with both his New Owner online column, Air Compare features in print, and this series on History’s Unique Aircraft. A jet named after a Klingon spacecraft from Star Trek and given the designation “YF-118G”, Boeing’s Bird of Prey incorporated dramatic design inside and out. Why is it still a mystery? It has less to do with Boeing—and more so with the giant aerospace OEM it acquired in the 90s, McDonnell-Douglas. 

Downed WWII Lancaster Bomber Raised from Sea Floor

Our readers love their warbirds—and they clearly love a good rescue story. Who doesn’t? Especially when the survivor in question is a rare Avro Lancaster Ed603—the heavy bomber the Brits used to defend their shores and stop Hitler in World War II. Eight decades later, the airplane’s remains and those of several crewmembers have been recovered in a poignant story by Kimberly Johnson that clearly struck a chord with readers.

Why Jet It Failed

From our unique position as the world’s largest aviation media organization—a title we took in 2023 with several key acquisitions—we have an insider’s look at much of industry. And sometimes that goes a step further, because we are deeply involved in flying and operating aircraft ourselves. When fractional operator Jet It collapsed in May, FLYING Media Group owner Craig Fuller brought his behind the scenes look at the cause of the collapse to FLYING’s readers as one of the HondaJet share owners affected by the fractional’s failure.

Collings Foundation Grounds Air Tour for WWII Aircraft

More living history made our headlines—with repercussions following the horrific accident taking B-17 Flying Fortress Nine-Oh-Nine on October 2, 2022. Technical editor Meg Godlewski went in depth when the Collings Foundation took the needed step to reduce its exposure to risk by halting its famous Wings of Freedom tours of WWII aircraft and other flying legends. Instead, it has adapted its mission to bring the aircraft to a wider range of school groups with more robust education and preservation.

NTSB Releases Fiery HondaJet Runway Excursion Details

Unfortunately, many of you seek FLYINGmag.com for its reporting on accidents—looking to learn beyond the reports of the National Transportation Safety Board and understand why they occurred. Our goal? To help you mitigate the causes of these occurrences in your own flying. While several high-profile events captured our readers’ attention—and continue to do so in Peter Garrison’s Aftermath analysis as well—runway excursions by business jets remain a stubborn accident profile that the industry seeks to reduce.

A Yak 18T’s Escape from Ukraine

An exclusive feature from our print edition also racked up significant views in just the few weeks since it debuted online—FLYING contributor Jay Selman revealed the inspiring story of a special Yak 18T and the complex maneuvering  to bring it out of Ukraine and into flying status in the U.S. Both restoration and rescue mission, this article drew a lot of attention—as do many of our aircraft features, including We Fly reports on new aircraft, and Restoration Nation features on bringing historic airplanes back to life.

SpaceX Starship Grounded Indefinitely by the FAA

And the top story—in terms of total time viewers spent reading it? Elon Musk’s SpaceX Starship has clearly caught our imagination in its democratization of space. Jack Daleo’s reporting on the subject drew folks to our site (thank you) and kept them reading all year long. We’re fascinated by space—and the dawn of a new era of exploration is upon us that more regular people will be able to take part in. 

That’s just one reason why I’m excited to see what 2024 brings us, in terms of stories.

And for me? I vow to #flymorein24! See you in the skies.

The post My Top <i>FLYING</i> Stories for 2023 appeared first on FLYING Magazine.

Under the new program, each pre-owned aircraft will undergo “discerning selection, a rigorous inspection and expert maintenance processes to ensure it meets Honda’s high standards for quality, safety, and performance before receiving the CPO designation,” the company said. The program also offers a range of services to support the fleet.

• READ MORE: Jet It Tells Owners To Find New Home for Aircraft

The new CPO business appears to be a continuation of Honda’s efforts to assist aircraft owners affected by the shutdown last month of Jet It, a major fractional operator of HondaJets. 

While Honda has not responded to inquiries about possible connections between the problems with Jet It and the CPO operation, the company said the new program “also offers end-to-end services.” Previously Honda offered free support to Jet It customers, including pilot services and parking for up to 90 days at its headquarters in Greensboro, North Carolina.

• READ MORE: Honda Aircraft Offers Free Logistics Help to Jet It Customers

Shifting attention to the used market also makes sense for Honda now that its earliest aircraft have been in service for more than seven years. The HondaJet global fleet totals more than 230 aircraft with more than 185,000 flight hours, Honda said.

The company said CPO aircraft have to pass a 208-point inspection by Honda-trained technicians in its network of authorized service facilities. Aircraft that qualify for the CPO program will also be upgraded to “the highest performance level available for each model, based on applicable service bulletins,” the company said.

• READ MORE: Honda Aircraft Reveals Certification Plan for HondaJet 2600 Concept

“As demand for the HondaJet continues to rise, pre-owned aircraft have become an increasingly important entry point into the HondaJet community,” said Amod Kelkar, chief commercial officer of Honda Aircraft. “The CPO program extends our commitment to excellence to all aspects of the long-term ownership experience and ensures that all HondaJet owners, both current and future, will have the best ownership experience and peace of mind, regardless of their position in the ownership journey.”

The post Honda Aircraft Unveils Certified Pre-Owned Program for HondaJets appeared first on FLYING Magazine.

When Jet It ceased operations, aircraft were stranded all over the country. Owners, who at one time relied on the company to manage the airplane, suddenly found themselves learning the logistics of maintaining a HondaJet HA-420, along with the potential pitfalls.

Mechanics Lien

Unpaid vendors are often the first sign a company is in financial distress. In the world of aircraft maintenance, unpaid vendors have options. A maintenance shop, for example, can attach a mechanic’s lien to an aircraft for an unpaid bill.

• READ MORE: Why Jet It Failed

Owners of an aircraft with a lien against it should consult an attorney in the state where it is located and reach out to the maintenance facility to either make a payment or try to negotiate a lower amount.

Putting the Pieces Together

In the case of Jet It owners, they are now thrust into a new position of managing the maintenance of an aircraft that had been the company’s responsibility. 

Former Jet It owners likely are confronting numerous questions, according to Mark Thibault, founder and chief technical officer of Crew Chiefs Corp., which represents clients during inspections for aircraft purchases and sales. Those questions include:

• What is the status of the aircraft? Is it properly hangared? What is the flying/airworthiness status?
• Are the aircraft programs, warranties, subscriptions, and insurances maintained and current?
• Are the logs and records secure, co-located with aircraft, and complete?
• What funds are needed to get each aircraft back online, including any unpaid ramp, MRO, and handling fees, as well as those for pilot recruiting?

In order to quickly get their aircraft back online, according to Thibault, owners will need:

• Permissions for all electronic maintenance tracking systems.
• Comprehensive records review, both physical and electronic.
• A review of the Jet It agreement to assess if compliance was satisfied.
• An assessment, such as a condition survey, or pre-buy inspection of the exterior and interior of the aircraft.
• A pending inspection timeline, with associated due lists, and service bulletin and airworthiness directive compliance.
• An observation flight.

Honda Aircraft Co. has also offered resources for former Jet It owners who have questions or need assistance.

HondaJet Maintenance Cadence

One of the questions circulating in the industry is, “I thought HondaJets were new; there cannot be much maintenance to perform.” Well, yes and no. Like everything else with aircraft maintenance, the answer is “it depends.”

• READ MORE: Honda Aircraft Offers Free Logistics Help to Jet It Customers

The HondaJet is on a phase maintenance program, which means maintenance is not scheduled by the calendar month but instead by the Hobbs meter, according to Anthony Agosta, the HondaJet maintenance manager at Florida-based Banyan Air Service . Banyan serves as the Southeast Service Center for the HondaJet.

Banyan currently has two former Jet It aircraft—one at its Naples location and the other at its main facility in Fort Lauderdale. 

One of the key components of the HondaJet maintenance program is managing the Life Limited Parts (LLP). It is critical that whichever unit of measure is used to calculate life is documented, recorded, and reviewed. LLPs typically include powerplants and landing gear but could be other parts on other aircraft models.

• READ MORE: Jet It Tells Owners To Find New Home for Aircraft

Honda Aircraft establishes 150 flight hours as the increment of measure for maintenance. The cadence is 150-, 300-, 600-hour inspections, and so on. The first major maintenance comes at the 600-hour mark, takes five weeks, and costs hundreds of thousands of dollars.

In the scenario facing the former Jet It fractional owners, the group of eight or nine would typically elect a spokesperson and give them power of attorney, allowing them to negotiate with maintenance providers, among others.

Owners have options when choosing maintenance programs for their HondaJets. The P3 Precision FlightReady airframe service program represents the highest level of service, covering standard replacement parts and labor. The P2 Performance program serves as the middle tier of service and covers parts only. Each plan excludes damage, so you are on your own if you suffer a bird strike or taxi into the hangar. Of course, owners can always maintain their aircraft and pay the maintenance facility for the time and material as they go.

Because General Electric is a first-tier OEM on the HondaJet, it has a separate engine program—the Engine Maintenance Care program (EMC) covers parts, while the EMC2 program covers parts and labor. Again, this excludes damage, so be careful flying through asteroid fields.

• READ MORE: What’s Next for Jet It Fractional Owners

Back to Birth

Aircraft maintenance begins on day one. Flight crew, maintainers, and management companies begin logging flights, incidents, and maintenance actions for the airframe and each engine. These records are part of the aircraft logs, and for LLPs, you need “back to birth,” or everything that happened since it left the factory. 

One of the first actions displaced Jet It members need to do is consult their logbooks. 

Bluetail, a company that specializes in back-to-birth aircraft records for business and general aviation and also a Jet It vendor, has stepped up as a potential resource.

On June 7, Scottsdale, Arizona-based Bluetail offered former Jet It HondaJet owners free and secure access to their aircraft’s digital logbooks and related records in the Bluetail app for a period of 60 days, according to company cofounder Stuart Illian. 

This offer will allow the owners to protect their aircraft’s value while continuing to operate, which may include additional scheduled and unscheduled maintenance events, Illian said. Bluetail’s service is free for those providing proof of ownership.

The company will also provide the owners (or designated users) with any necessary training or product support. Additionally, should the owners decide to continue their Bluetail subscription, the software firm will waive the onboarding fees typically charged for the transition, according to Illian.

Situations like this highlight the value of having an aircraft’s operational and maintenance records digitized and hosted in a cloud-based network, and how especially critical it is for aircraft managed and maintained by a third-party provider.

The post Jet It Fallout Leaves Owners Shouldering Aircraft Maintenance appeared first on FLYING Magazine.

As reported exclusively by FLYING, the initial grounding of Jet It’s HondaJet fleet just started the snowball rolling. Soon after, Jet It grounded its entire fleet—including its Embraer Phenoms—and terminated its employees through a letter sent on May 26. The share owners of Jet It aircraft had also been told to find new homes for their assets.

While operators such as Volato and Jet Token have swooped in to court customers—and hopefully find positions for the type-rated pilots and other employees left hanging—the manufacturer of the HA-420 series is also standing ready to assist. 

Honda Aircraft has established a team that will help provide “seamless transitions to alternative aircraft management options for the HondaJet fractional owners who have been released from Jet It,” according to a statement from the company. This includes parking at HACI headquarters in Greensboro, North Carolina, for up to 90 days, including any pilot services needed to move those aircraft into position—free of charge to the customers.

This is no small thing, as several tails had been left in various states of “hangar limbo” following the Jet It shutdown—and some have been parked for nonpayment of maintenance and other outstanding bills.

“We understand the challenges faced by fractional owners who have been impacted by the suspension of their aircraft management after being released from contract by Jet It, and are now seeking alternative arrangements,” said Amod Kelkar, chief commercial officer and vice president of customer service for Honda Aircraft. “Consistent with our dedication to customer satisfaction, we have developed and established this assistance plan for those HondaJet owners in need of additional support during this transition period.”

Owners who think they might be eligible are encouraged to contact Honda Aircraft at hacifieldsupport@haci.honda.com.

The company is collaborating with the HondaJet Owners and Pilots Association and other groups on an upcoming safety standdown to address recent incidents involving runway overruns in the past 12 months. Runway excursions form a hot topic amongst business jet pilots and operators across the industry, as they make up the most common type of accident in business aviation, according to the National Business Aviation Association. Mitigating the risk will be the focus of the standdown.

“The HondaJet remains a reliable and safe aircraft to operate, and we reaffirm our confidence in the aircraft’s safety through our engineering and analysis,” said Kelkar, supporting the model. Honda Aircraft has delivered a total of 227 of the HA-420 series since 2015 through the first quarter of 2023, with approximately 212 of those on FAA registration. Jet It operated 21 tails through its program, encompassing roughly 10 percent of the total fleet.

The post Honda Aircraft Offers Free Logistics Help to Jet It Customers appeared first on FLYING Magazine.

Hopefully, by now all of the owners have had the chance to meet. We received a list of the individual owners from Jet It, along with contact information. If you’re an owner, you should organize a call with your specific owner group ASAP. You are all on the same team, now is the time to get a game plan together.

Appoint one to two people on the team to keep the process moving forward, regardless of direction. Ideally, someone with experience in aviation, as they will need to understand all of the moving parts.  

Even though Jet It CEO Glenn Gonzales suggested “patience” on owner calls last on May 24—but that isn’t great advice.

• READ MORE: Jet It Tells Owners To Find New Home for Aircraft

You own a very expensive asset that needs to be dealt with. Every day that you own it, the more expenses it will rack up. Hangar fees, maintenance, insurance, etc., all cost money. Nothing like having an expensive toy that you can’t use. 

You need to track down the aircraft. Every owner group I’ve spoken with has figured out where their aircraft is. 

Most importantly, find out what your owner group wants to do with the aircraft. You have a few options: you can sell the aircraft; you can put the aircraft up into a dry-lease with another operator; a single (or group of owners) can buy the airplane.

While Gonzales suggested that owners could contract directly with former Jet It pilots, this strikes me as challenging for larger owner groups that are geographically distributed, not to mention questions about legality of such a process. If you do decide to go this route, I would engage with an aviation attorney to make sure you are protected here.

The worst thing to do here is to let the aircraft sit long without a plan. We are all responsible for the bills on our aircraft from here on out (along with unpaid bills that Jet It racked up) and those bills aren’t going to cheap. 

If you decide to sell the aircraft, find a Honda broker or dealer that can help with this. Brokers will be glad to take you on as a client, but I would recommend doing diligence on the broker. Have they sold HondaJets in the past? Do they have experience with the aircraft? Can they help you navigate all of the maintenance issues you need to contend with?

Honda Aircraft Company has a list of dealers on its website, and you can find a dealer to assist here. I would recommend going with this group over a non-Honda dealer because of their familiarity with the jet and mutual interest in seeing a positive outcome for the Honda ecosystem. 

Keep in mind that the aircraft is not going to be flown much over the next few weeks, so find someone that has experience with the airplane and will agree to keep it in compliance with the maintenance up to date.

• READ MORE: Why Jet It Failed 

I live in Tennessee and our Honda Aircraft dealer is Banyan. They provided us with a turnkey proposal, including hangar access to help us manage the aircraft while we figured out what we wanted to do with it. 

Selling the aircraft is only one option. With nine owners, we felt that selling the aircraft was the best path for our ownership group. That way we could move forward making decisions as to our future missions individually. 

Another option is to put the aircraft into a short-term lease with another operator. 

Volato—Jet It’s biggest competitor among Honda Jet operators—has offered a 90-day lease for ownership groups. It is billed as a dry-lease arrangement, where all expenses are taken care of (except for maintenance labor). At $650 per hour, it’s an interesting proposal to get the airplane in the air and generate some revenue to offset most of the fixed expenses, including insurance, hangar fees, and operational fees. 

Matt Liotta, CEO of Volato told FLYING: 

“We feel for the customers who are facing this difficult situation. The entire team at Volato is here to help as much as we can, and we are prepared to take on any number of planes and customers. We do recommend that anyone consult with a lawyer before deciding on how to move forward.”

As noted earlier, getting a good aviation attorney is critical. This will be a long and drawn-out process, with lots of nuances. Getting someone with experience navigating all of the issues (aviation, corporate, and tax law) is critical.

There is some good news out of all of this. 

Unlike a jet card or membership program, Jet It’s fractional program offered direct ownership of an actual aircraft. This means that fractional owners will recoup a large percentage of their investment in the airplane after some initial headaches. 

If it were a membership program, where the asset is prepurchased time on an airplane from a charter operator, like in Wheels Up’s case (NYSE: UP), the only thing that program members would be guaranteed is a position of being a junior creditor in a bankruptcy. 

The post What’s Next for Jet It Fractional Owners appeared first on FLYING Magazine.

At the time of the grounding, Jet It claimed that it was taking the action out of an abundance of caution in light of an incident with a HondaJet. The airplane ran off the end of a runway in South Carolina. Jet It CEO Glenn Gonzales told owners that he was concerned about the safety of the aircraft and wanted to understand the reason that HondaJets were more susceptible to runway excursions than similar aircraft. 

Coming from the largest operator of HondaJets in the U.S., it was a shocking statement. The problem was that Jet It also grounded its other aircraft in the fleet, not just the HondaJets, leaving many owners questioning whether this was a “negotiating tactic” to allow the company to exercise the force majeure clauses in fractional contracts, enabling the company to cancel the programs and agreements altogether. 

After all, if Jet It could stand behind the story that the HondaJet was an unsafe aircraft, it would shield the company from liability stemming from potential owner lawsuits and damages caused by an abrupt shutdown and service disruption. 

The problem is that the safety issue doesn’t appear to be the cause of Jet It’s sudden service disruption—but cash does. 

On Friday, May 26, Jet It informed employees in a letter that their jobs were permanently terminated, and the company was closing down. There was not a mention of a bankruptcy, but that is likely not far behind. 

Sources tell FLYING that at least two employees—aircraft sales executives for the company—are both owed more than $200,000. 

• READ MORE: Jet It Tells Owners To Find New Home for Aircraft

Meanwhile, Jet It aircraft have been grounded all over the country. They sit at FBOs and maintenance shops, where the owners will have to cover all unpaid expenses that have accumulated on their aircraft tail. This includes any unpaid fuel, maintenance, and storage bills that the aircraft may have accrued.

Over half of the fleet is in maintenance, with tens to hundreds of thousands of dollars owed by Jet It that will have to be paid by the fractional aircraft owners of the various tail numbers.

Owners are scrambling to find new homes for their aircraft, but they are on the hook for any expenses that have been incurred before they can be moved. 

The primary hangar for Jet It, where all of the aircraft logbooks were kept, is in Greensboro, North Carolina. The entity at KGSO hasn’t been paid in recent months, so the hangar owners permanently locked Jet It out of the hangar.  

• READ MORE: What’s Next for Jet It Fractional Owners

For vendors that have worked with the company for a few years, this was not a surprise. 

Many of the companies that Jet It has done business with have struggled to get paid in a timely manner, if at all. 

Jet It would string vendors along for months—especially maintenance providers. 

Of the 21 HondaJets that Jet It managed, at least 10 are currently in a maintenance shop. Three of the airplanes in the fleet currently have maintenance liens for unpaid bills.  

A representative for one maintenance shop said it has had one of the jets in the shop for months and wouldn’t release it because Jet It would not pay its $24,000 bill. 

Jet It gained a reputation among HondaJet service centers for being slow or delinquent on payment, so the shops often requested payment up-front. This would often delay the time it took for the HondaJets to be serviced and severely impacted the company’s operations. 

Honda Aircraft Company, Jet It’s most important vendor, also wasn’t paid on time. Sources told FLYING that Jet It owes Honda Aircraft more than $1.6 million in its service contracts under a program known as “Flight Ready” and the engine maintenance program “EMC2.” 

Honda Aircraft intends to work with fractional owners, helping them navigate the mess that Jet It has left behind.

Too Good To Be True 

According to sources familiar with the company’s business model, Jet It’s ability to scale was largely a result of how attractive the Jet It program was to prospective customers. In fact, the program may have been too attractive, driving robust growth and feeding a business model with core flaws. 

Jet It generated revenue through several major sources: fractional-owner hourly fees; monthly maintenance fees; up-front selling of aircraft fractional positions; and off-network charter flights. 

Jet It priced its hourly charter rates for clients at incredibly attractive rates. At just $1,600 per hour, the Jet It program was a dream for prospective jet owners. By comparison, Volato, Jet It’s biggest competitor in the HondaJet market, charges $3,450 per hour, plus fuel pass-through.

Initially, Jet It’s per-hour rate included the cost of fuel, but in the wake of the Ukraine conflict, Jet It implemented a fuel surcharge program at $250 per-hour.

Jet It’s contracts also did not require the fractional owner to pay for deadhead to reposition the jet. The owners only paid for the time they were in the aircraft.

A source familiar with Jet It’s revenue model suggested that the operating cost per hour for owners, including deadhead time, was likely around $2,700 per hour. This means that although most flights were a screaming deal for fractional owners on an hourly basis, they incurred a loss for the company.  

The original proforma for Jet It assumed that fractional owners would have access to their airplanes for 250 days per year, with the balance available for Jet It to sell for network charter operations at a substantial premium over the owner rate. 

This may have worked, but Jet It’s aircraft were often unavailable because they were out of service for maintenance. Earlier this year, Jet It told fractional owners that nearly 75 percent of the fleet was out of commission because they were in the shop for maintenance. Some of the aircraft were in the shop for routine maintenance, others were being held for lack of payment. 

The Major Flaw in Jet It’s Model 

Jet It prided itself on offering exceptional customer service and contractually guaranteeing fractional owners aircraft availability, as long as the aircraft was booked 72 hours in advance. If an in-network aircraft was not available, Jet It was required to go into the charter market and purchase aircraft time at the charter market’s clearing rate—often at rates that were five times the rate that the fractional owner was paying Jet It for the same service.

In a letter sent to fractional jet owners in November 2022, Gonzales stated that Jet It had to “absorb in excess of $20 million in off-fleet expenses,” just to fulfill fractional owner flight demand. In the same letter, Gonzales blamed Honda for its service woes. 

The monthly maintenance expense provided some level of recurring revenue for the company, but not enough to cover the cost of the company’s extensive back-office and operational systems. 

The company always made money selling fractional aircraft positions, and this was a key driver of cash flow for the company, yielding more than $500,000 per aircraft the company was able to place into its owner network. In the early days of COVID, as interest around personal aviation exploded, so did cash flow opportunities for Jet It. In fact, it is likely that the company relied too heavily on this source of cash to fund its operations. 

But like many businesses in 2021 to 2022, supply chain issues began to impact Honda Aircraft Company, and Jet It could not source as many airplanes to sell to members. This led to the cash flow coming from new fractional sales drying up. That was a major blow to the company’s business model. 

In 2022, the company raised $16 million in structured finance from Loeb.nyc, the private equity firm of former Time Warner executive Michael Loeb and Blue Equity, LLC, another private equity firm. This provided a lifeline to the company as it dealt with supply chain challenges. 

Then the demand for fractional ownership slowed, as the COVID crisis died down. This also coincided with the easing of some of Honda Aircraft’s supply chain issues. 

On October 6, 2022, Jet It was allocated three HondaJets for its network. With the imminent delivery of new aircraft and an operating deficit that had built over the past couple of years, Jet It found an opportunity.   

Gonzales was a former Honda Aircraft salesman who understood the cash flow opportunity in flipping an aircraft. He did it very well. With the waiting time for a new HondaJet measured in years, buyers were willing to pay a vast premium over the wholesale price that Jet It had negotiated. 

Under Jet It’s contract with Honda Aircraft, it was allocated aircraft only for charter or fractional ownership. It was not permitted to sell new HondaJets to owners, unless it was for their own network use. However, Jet It sold at least one airplane to a buyer for exclusive use, a clear violation of the agreement with HondaJet. Therefore, Honda Aircraft Company sued Jet It. 

The lawsuit was later settled, but not until after Gonzales had gone public about his frustrations with Honda Aircraft, calling into question the service, safety, and maintenance record of the HondaJet. He suggested that the reason that he sold the airplane was that he had decided to move away from HondaJets and into Embraer Phenoms as the aircraft of choice for Jet It. 

Meanwhile, because of the purchase of the HondaJet and its subsequent sale to a sole owner, Gonzales received a quick cash lifeline for the company, which enabled him to fight another day. 

Erratic Customer Service During a Cash Crunch

But Jet It’s cash flow woes continued. The operating model was starting to break down, and customers noticed a deterioration in service. Flights that had been booked weeks or months before were suddenly canceled owing to the lack of aircraft availability. Jet It stopped offering off-network charter flights, which was in violation of its fractional customer agreements (even for maintenance issues). 

In an effort to deflect blame for service, operational, and financial issues, Jet It has tried to push the blame for these issues onto its primary business partner, Honda Aircraft Company. 

The poor service reputation that Gonzales attempted to pin on Honda Aircraft was likely a result of Jet It’s inability to pay its vendors, and not the HondaJet’s lack of quality. This was explained to FLYING by one vendor in the HondaJet service ecosystem.

Jet It’s poor service reputation also exacerbated the company’s problems. 

With aircraft stuck in maintenance and bills continuing to pile up, Jet It had fewer aircraft for its fractional network and almost no lift available for the much more lucrative charter network. Over time, more aircraft went into maintenance, taking more of Jet It’s network down. 

On May 24, 2023, it all ended.

Gonzales called fractional owners and told them that their aircraft would need to be moved out of the Jet It network and that those airplanes would “not fly with Jet It” any longer. 

The fractional owners that thought they were getting a great deal on a HondaJet learned that it was a deal too good to be true. 

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The post Why Jet It Failed appeared first on FLYING Magazine.

At least that is the impression Jet It founder and CEO Glenn Gonzales gave fractional aircraft owners on a series of virtual calls on Wednesday, five days after he ordered a ground stop on the fleet of HondaJets the company manages. 

Gonzales told HondaJet owners in the Jet It program their aircraft “will not be flying under Jet It” any longer. 

(Disclosure: I am a Jet It fractional owner and attended the fractional owner calls.)

Gonzales suggested fractional owners should consider an array of options that include transferring the aircraft to another operator, selling the aircraft, or contracting directly with former Jet It pilots on furlough. 

• READ MORE: Jet It Moves into Furloughs as Pause in Operations Continues

Fractional aircraft owners typically own a percentage of the aircraft, rather than the entire airplane. Jet It offered a range of ownership options, with the smallest being one-tenth ownership. 

In a fractional relationship, a group of owners is pooled together to purchase an aircraft. The aircraft is then contracted out to an operator that flies the aircraft, oversees pilots, maintenance, flight operations, scheduling, and all of the day-to-day tasks of operating it. Owners typically pay a monthly maintenance contract, in addition to a per-hour operating fee when they fly on the aircraft. 

Fractional ownership programs are attractive for consumers because the pool they belong to makes it less expensive to gain ownership of an aircraft, rather than buying it outright. Operating costs are also shared between the group of owners. 

Gonzales Blames HondaJet 

As a Jet It fractional owner myself, I attended one of the calls with the other owners of our aircraft. It was the first time I had met any of the other owners, and we were processing the news. 

During our call with Gonzales, he put the blame for the failure of Jet It entirely on the Honda Aircraft Company, claiming that HondaJet aircraft suffered from a series of runway overruns. He cited a total of 20 incidents since the HondaJet was first introduced in December 2015. He compared that to the Embraer Phenom 100, which has seen 21 runway incidents since its first delivery in 2009. 

Gonzales said the catalyst for grounding the HondaJet was an incident in Summerville, South Carolina. A Honda HA-420—not owned by Jet It—skidded off the runway and ended up in the grass. 

• READ MORE: Honda Aircraft Says It Settled Its Lawsuit Against Jet-It

“This one was different in the sense that it caught fire,” Gonzales said. 

Gonzales said Jet It has requested due diligence information from HondaJet on the safety of the aircraft, documentation on the events surrounding the runway incidents, and why this has happened with the Honda aircraft. 

Gonzales did not give a timeline of when Jet It expected to resume operations but made it very clear to owners that the company program they had participated in was terminating, and the owners would need to figure out what to do with their aircraft. 

Skepticism of CEO Claims 

One owner on the call said the story “didn’t feel right to him,” challenging Gonzales with a question of why Jet It is the only company to ground HondaJets and that neither any transportation authority nor Honda had required or even suggested it. The owner also said, “This feels like a negotiating tactic with Honda or your (fractional) owners.” 

Another owner suggested it “wasn’t an airplane issue but rather a company issue.” 

That owner pointed out that Jet It had also grounded its Phenom 100s, suggesting they should be flying if the company made the decision about the HondaJet entirely based on safety factors. 

The same owner also questioned Gonzales about the financial condition of Jet It, saying “it sounds like you are bankrupt to me.” 

The sentiment resonated with many of the other owners on our call. 

In response, Gonzales claimed he did not intend to file for bankruptcy but referenced the financial challenges of running a company with its entire fleet of aircraft grounded. He also asked for patience but didn’t suggest why it was merited. 

With the entire Jet It fleet currently grounded, nearly all of the company’s staff have been terminated, including the pilots. This includes pilots flying both the HondaJets and Phenoms. 

Jet It boasted a fleet of 20 HondaJets and a couple of Phenom 300s and Gulfstream G150s. Prior to this action, Jet It was the largest operator of HondaJets in the U.S. 

Fractional Owners Consider Options 

In a situation where the operator—in this case Jet It—is shutting down its fractional contracts, the owners must come together to decide what they want to do with the aircraft. This can be challenging because it requires the owners to reach a consensus on what they want to do. As is the case with many of the Jet It owners, often they previously have had no relationships or contacts with the other owners and are frequently unaware who the other partial owners are. 

Now, they must come together, develop a plan, and decide on a course of action. Because Jet It has laid off nearly all of its workforce, the fractional owners have to do the work themselves, with little help from the company. It is a mess. 

Do you have a news tip to share? Send me a message @freightalley on Twitter. Your name will not be used without your permission.

The post Jet It Tells Owners To Find New Home for Aircraft appeared first on FLYING Magazine.

According to several sources that reached out to FLYING, Jet It has begun a significant round of furloughs, capping a rough weekend for the company in which it has also voluntarily grounded its fleet and paused operations.

In its recent series of decisions made following a runway overrun accident of a HondaJet last week in South Carolina, Jet It moved first to a “safety stand down,” according to an email sent by CEO Glenn Gonzales to company stakeholders on Monday.

• READ MORE:  Jet It Grounds Fleet of Honda Aircraft

“After careful consideration of this and other recent similar events, we have made the difficult decision to implement a safety stand down as of May 18, and ground this aircraft type in our fleet effective immediately,” said Gonzales. “Jet It has taken this precautionary measure to ensure the safety and well-being of our passengers, pilots, and the integrity of our operations. The stand down will be focused on reviewing policies and procedures for the safe operation of the HondaJet aircraft and gathering more information.”

HondaJet Owners and Pilots Association Responds

In its separate response to a series of 8 accidents that have taken place involving HondaJets over the past year, the HondaJet Owners and Pilots Association had already called for its own safety analysis, and subsequent informational sessions and training for operators to address those concerns at a future date—with no current pause in operations. In a video to its members, HJOPA executive director Julie Hughes framed the association’s position.

“All of you are experienced pilots, and while you have your own ideas involving each of these events, it’s critical that we do not jump to conclusions  or make unfounded assumptions,” said Hughes. “Instead, we are allowing the data to inform us about this concerning trend within our platform. This data-driven approach will guide us in taking appropriate actions to enhance the safety of each of our operations.” HJOPA is working in concert with Honda Aircraft Co., FlightSafety International, and its board and membership.

The “organized break in aviation activities” planned by HJOPA stands in contrast to the emergency-style “stand down” in progress at Jet It.

The Jet It Model

Jet It has positioned itself uniquely in the market, offering share owners use of the fractional fleet at a relatively low rate of $1,600 per hour. When the company is able to serve its customers utilizing its fleet, it typically makes a modest amount per hour on the transaction. But if the fractional has to fulfill a customer request for service with an aircraft outside of its fleet, that margin erodes sharply. 

In the midst of a dispute regarding service from Honda Aircraft Co., Jet It announced it would pivot its fleet away from the HA-420 and to Embraer’s Phenom 300. Part of the reason Gonzales gave for the change was in the “more than $20 million” in off-fleet expenses since 2020 that Jet It had to absorb—which it blamed on the poor service record for the HondaJet.

Honda Aircraft Co. (HACI) responded with a breach-of-contract lawsuit filed against Jet It, saying it had violated certain agreement terms and defamed the OEM with its disparaging statements. HACI dropped the lawsuit in a confidential settlement in April, and it confirmed that it considered Jet It a customer it would continue to provide service for as agreed upon.

However, Jet It’s own customers have reported significant fall off in service levels since the beginning of 2023, to the point of unreliability. Combined with the word from two former executive-level employees (speaking on condition of anonymity) that Jet It has begun furloughing personnel at all levels of the enterprise supports speculation that the business is in serious condition.

FLYING will be updating this story as more information becomes available.

The post Jet It Moves into Furloughs as Pause in Operations Continues appeared first on FLYING Magazine.

The company, one of the largest HondaJet fleet operators, reportedly notified employees internally of the aircraft “stand-down” following an accident involving another operator’s HA-420 model in Summerville, South Carolina, on Thursday, according to Private Jet Card Comparisons.

• READ MORE: Jet It Moves into Furloughs as Pause in Operations Continues

The National Transportation Safety Board said it is investigating the Thursday accident that involved a HondaJet, listed as owned by Upfrunt Services LLC of Dover, Delaware. The aircraft hydroplaned at the end of Summerville Airport’s (KDYB) Runway 24, struck a berm, and caught fire, according to Aviation Safety Net. None of the five people onboard the aircraft were injured in the event. 

“We are instituting a safety stand-down while we request further information from Honda. This means we will not be operating the Honda Aircraft until further notice,” Jet It said in an internal message, according to Private Jet Card Comparisons. “During this stand-down, we will be reviewing all information, procedures, and specific data as it becomes available. We will update you with more information as it becomes available.”

• READ MORE: Jet It Pivots Away From HondaJet to Phenom 300

The stand-down was to occur over the weekend, and no date for the resumption of operations had been determined, according to the report.

In the days following the pause in operations, Jet It notified its stakeholders.

“After careful consideration of this and other recent similar events, we have made the difficult decision to implement a safety stand down as of May 18, and ground this aircraft type in our fleet effective immediately,” Jet It CEO Glenn Gonzales told company stakeholders in an email Monday. “Jet It has taken this precautionary measure to ensure the safety and well-being of our passengers, pilots, and the integrity of our operations. The stand down will be focused on reviewing policies and procedures for the safe operation of the HondaJet aircraft and gathering more information.”

Jet It’s action was voluntary and not made at the recommendation of an aviation authority, according to Honda Aircraft Company.

“Jet It’s decision to ground their HondaJet fleet was made independently by Jet It. Importantly, neither Honda Aircraft Company nor any aviation authority has recommended this grounding. Therefore, we have no comment about the decision by Jet It to ground its fleet,” the company told FLYING in a statement Monday. 

READ MORE: Honda Aircraft Says It Settled Its Lawsuit Against Jet It

“In all closed investigations of previous runway events, investigators found no causal factors from the aircraft’s design or any system malfunction. Our engineering and analysis supports our product as a safe aircraft to operate,” it said, adding that the rest of its feel will continue with normal operations.

“Honda Aircraft holds the safety and reliability of our aircraft as our top priorities and our dedicated team is working closely with the NTSB and FAA to determine the cause of the recent occurrence and to implement any necessary measures.”

The report of Jet It’s pause in HondaJet operations comes just weeks after Honda Aircraft Co. reached a confidential settlement with Jet It that ended its breach-of-contract lawsuit against the North Carolina-based operator. In the lawsuit, Honda alleged Jet It had violated agreements and made “disparaging comments” about the aircraft manufacturer. 

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