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Can JetBlue Be a Pioneer in Private Jet Services?

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New investment

JetBlue (JBLU) has taken a small stake (exact stake not clarified by JetBlue) in JetSuite, the fourth-biggest private jet operator in the United States. What makes the investment worthwhile is JetSuite’s recent launch of commercial operations called JetSuiteX.

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How do they operate?

JetSuiteX is classified as a public charter airline, which means that it can operate at private terminals and passengers do not need to clear security. Passengers can thus arrive only 15–30 minutes prior to departure.

Fleet

JetSuite flies the Embraer (ERJ) E135s. Since a public charter can only have 30 seats, these Embraer planes have seven fewer seats than the normal E135s. That difference gives passengers ample legroom and flying comfort. By the end of 2017, the company plans to own ten of these planes. JetSuite bought these planes at cheap rates from regional arms of Delta Air Lines (DAL), American Airlines (AAL), and United Continental (UAL) that do not use these planes anymore due to reduced fuel efficiency.

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Where do they operate?

Currently, JetSuite flies only to six destinations on the West Coast, including Burbank, San Jose, Carlsbad Las Vegas, Bozeman in Montana, and McClellan-Palomar Airport near San Diego.

The company plans to add San Diego, Santa Barbara, and Phoenix as destinations.

How much does it cost?

A one-way fare on JetSuite from Burbank to Las Vegas costs $99—slightly higher than airlines that charge $82 on average.

Will it work?

According to JetBlue’s CEO Robin Hayes, “We just see a great opportunity on the West Coast in terms of offering customers a much more convenient alternative in terms of how to fly.”

The deal can, in fact, open up many opportunities on the West Coast. The aim is to provide private jet services at commercial fares. Ever since JetBlue lost the Virgin America (VA) bidding war to Alaska (ALK), it has been on a West Coast expansion spree. This investment in another step in that direction. If it’s successful, we could see another profitable venture for JetBlue after the launch of its premium Mint service.

Investors can gain exposure to JetBlue by investing in the iShares S&P Mid-Cap 400 Value ETF (IJJ), which invests 0.99% of its portfolio in the stock.

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