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By Jarrett Banks
Flying during a pandemic is a challenge. But it’s one that Jet Token Chairman Mike Winston and Chief Executive Officer George Murnane believe they can handle. Private travel, long exclusively for the well-heeled, is now available with a touch of a button on a smartphone and has seen a rebound during the health crisis.
In an interview with IPO Edge, Messrs. Winston and Murnane said that in addition to chartering flights, they’ll be taking delivery of a four-passenger HondaJet this year. Winston, who is also the founder of Sutton View Capital, added that technology is a part of everything the company does, from the app to the use of blockchain and bitcoin. The full interview is below:
IPO Edge: How are you dealing with the pandemic and the fear of flying right now?
Insofar as people want to travel, many wish to do so on a private plane to reduce the risk of infection. Our iOS app for private jet service makes it easy to look, book and fly. Later this year we’re planning to release new versions of the app for both iOS and android. Although we are solely operating as a charter operator today, with our first aircraft scheduled for delivery later this year, we require face masks and cabin disinfection for all flights.
IPO Edge: You launched your app in September 2019. What was business like before the pandemic hit?
We saw charter demand fall off starting in mid-March but have inadvertently fared much better than others because we do not yet have our own aircraft. As noted above, we expect delivery of our first HondaJet later this year. With both new and returning flyers coming to market to avoid Covid, and the charter market having largely rebounded, we like our position and are cautiously optimistic about the benefits of the broader recovery ahead.
IPO Edge: Can you talk about your fleet of leased HondaJets? Many people probably haven’t flown on them before.
After 20 years of development and five years in service, the HondaJet has earned a reputation for reliability, comfort and speed. It’s unique over-wing engine design makes for a roomier, faster and quieter travel experience. The average U.S. private jet flight runs about an hour and half and carries two to three passengers. The HondaJet can carry four passengers a little over two hours and is therefore ideally suited to most trips. We noticed that the six-person Citation 560/XLS is the most commonly landed private jet in the U.S., but the data suggest this asset is typically flying one third its range and with only one half its potential passenger load. Translation? Flying the average mission profile on the most commonly landed jet is overkill and more costly. The world’s largest manufacturer of combustion engines (Honda Motor Co.) has seen this economic dissymmetry and stepped into the sweet spot of the market with HondaJet. We’re proud to be a part of the HondaJet story; and as an aside their plant in Greensboro, NC is a technical marvel.
By getting the engines off the tail and onto the wings HondaJet has created a quieter cabin experience and a large baggage compartment that can handle large form factor items with ease. Also, unlike some other light jets, the HondaJet offers a fully enclosed lavatory, and a galley for snack and beverage service. Can the HondaJet be configured for five persons, with an additional sixth person seated in the belted lavatory area? Yes. Do we recommend it for optimal comfort? No. But for urgent travel the HondaJet is versatile enough to rise to the occasion.
IPO Edge: How would the blockchain payments work if you wanted to add a commercial leg to your journey?
We’d handle the blockchain payments and remit the dollar cost of the flight to the airline (or charter operator). As with other forms of air travel, the price is paid and the itinerary set before the trip takes place. So, a blockchain payment for a private only itinerary would be the same user experience, mechanically speaking, as a payment taken for an itinerary with both a private and a commercial leg. The blockchain payment user experience is complicated, and through our upcoming app release we’ve endeavored to eliminate this issue. We want you to look, book and fly, not look, book and then spend a half an hour tinkering with a wallet address.
As a more general matter, use of blockchain technology will enable us to deliver service in exchange for payment or, if issued, upon redemption of Jet Tokens, on evenings, weekends and holidays when banks are closed. We anticipate that we will also be able to deliver services on a same day basis against payment. This travel may not have otherwise taken place, for want of payment technology. Other forms of payment may not clear on the same day or could be delayed if exceeding a client’s credit card limit. International wires can take from one to four business days to clear as they must often transit from a foreign bank, through a domestic correspondent bank and then finally to a domestic recipient bank. These improved efficiencies and rapid settlement of large transactions that are typical in the air charter services industry may in turn allow for faster booking confirmation of air charter flights, particularly on weekends and holidays coincident with periods of peak travel demand.
IPO Edge: Having your own fleet will provide a nice backup in case of last-minute cancelations. What other steps are you taking?
Our operating partner, Gama Aviation, runs the largest open fleet of private jets in the U.S. So, if a charter operator cancels, and then for some reason one of our own aircraft is not otherwise available, we have ready access to a large fleet of alternative jets.
IPO Edge: Do you have a timeline on when you think flying will return to normal?
Because aviation is economically sensitive, a prediction about flying returning to normal has embedded in it a prediction about the economy returning to normal. We cannot predict the economy, but that said, we can reliably say that private travel has rebounded more quickly that commercial travel. Private jet charter hours, a key measure for our sub-segment of air travel, dropped sharply in mid-March but have steadily risen since that time. For example, hours flown in the two-week period that includes the last week of June and the first week of July are only down 10% vs the same period in 2019. We suspect that those who can afford it are flying private to avoid infection, and that travel by these new flyers, alongside returning flyers, has accelerated the rebound in charter hours.