The Rise and Fall of Deposit-Based Programs in Business Aviation

In business aviation, deposit-based programs have long been seen as a way for companies to offer frequent flyers the convenience of private jet travel without the ownership complexities. Clients deposit significant sums in exchange for guaranteed flight hours, but these models, while promising, often face financial strain. This has led to some spectacular collapses in the industry. In this article, we will explore key examples of deposit-based programs that have failed, including Air Avanti, Set Jet, and others, culminating with recent concerns about Volato's deposit program.

Air Avanti: The Early Cautionary Tale

Air Avanti is a prime example of how rapid expansion, combined with financial mismanagement, can lead to the downfall of a deposit-based model. Founded in the early 2000s, Air Avanti marketed itself as an exclusive jet club, offering guaranteed access to its fleet for members who deposited funds. As it grew, the company began experiencing financial strain due to rising operating costs and overcommitting to customer demand.

Eventually, the cracks started to show. Clients reported issues with availability, and as the company began to buckle under the weight of its commitments, the depositors were left with no flights and, more critically, no refunds. Air Avanti filed for bankruptcy, leaving behind a significant number of dissatisfied customers who had lost considerable deposits. The fallout was one of the earliest warning signs of how difficult it can be to scale this model effectively.

Set Jet: The Membership Program That Couldn’t Fly

Set Jet, another failed attempt at this model, took a more exclusive approach, positioning itself as a luxury lifestyle product. Offering jet travel for a fraction of the cost of traditional charter services, it attracted significant interest. The idea was to make luxury travel accessible through membership fees and deposits. However, the business model relied heavily on continued inflow of new customers to balance its financial books, a strategy that proved unsustainable.

As competition in the semi-private market increased, Set Jet began experiencing financial difficulties. The program's reliance on growing the membership base, combined with operational cost increases, meant that funds were drying up faster than they were coming in. In the end, Set Jet could not deliver the promised luxury experience consistently, leading to its shutdown and leaving customers with unused deposits.

Avantair: Turbulence and Bankruptcy

Another example of a deposit-based program that failed is Avantair. Operating a fleet of Piaggio Avanti aircraft, Avantair offered fractional ownership and a deposit model. The company grew rapidly, but with growth came operational challenges. In 2013, Avantair grounded its fleet following safety concerns and a shortage of spare parts. The company tried to recover but was unable to address its operational challenges, leading to bankruptcy.

Much like Air Avanti, Avantair's depositors were left stranded. Customers who had deposited funds to secure flight time faced a lengthy battle to recover their money, further eroding trust in these types of programs.

BlackJet: A Case of Over-Promising and Under-Delivering

BlackJet aimed to be the “Uber of private jets,” allowing customers to book seats on jets via a smartphone app. Backed by high-profile investors, it attracted considerable attention. Its business model required members to pay an initial deposit for the privilege of booking flights. However, BlackJet quickly faced issues, struggling to secure enough flights to meet customer demand. 

The lack of available flights, combined with growing competition from other services and operational mismanagement, led to BlackJet’s eventual shutdown. Like with other programs, deposit holders were left without the ability to reclaim their funds, adding another black mark on the industry's reputation.

Recent Concerns: Volato's Deposit Program

As of 2024, concerns are rising around Volato, a company that offers fractional ownership and deposit-based jet programs. Volato attracted customers by offering more flexible fractional ownership plans, catering to the growing demand for tailored private aviation services. However, recent reports suggest that Volato has been struggling to meet flight demand, leading to concerns among deposit holders. While the company has not declared bankruptcy, these challenges are raising red flags in the industry.

In particular, the increasing number of complaints about delayed flights and limited availability is eerily reminiscent of the early warning signs seen in previous companies. Industry insiders are watching closely, as Volato’s response to these concerns will likely determine the future viability of their deposit-based model and the financial implication for members.

The Future of Deposit-Based Programs

The repeated failures of deposit-based programs raise serious questions about their long-term viability in business aviation. The model, while attractive in theory, often struggles to balance the influx of customer funds with the operational realities of maintaining a fleet and meeting customer expectations. Many of these programs start with strong promises but fail when they can’t maintain flight availability, leaving customers out of pocket.

For potential customers, the key takeaway is to be cautious. While the appeal of deposit-based jet programs can be enticing, history has shown that these programs can be risky. Whether Volato will join the ranks of companies like Air Avanti, Set Jet, and BlackJet remains to be seen, but the warning signs are clear.

As always, prospective customers should conduct thorough due diligence before committing to any deposit-based private jet program. Speak with sales@thepjc.com today to review facts and figures of over 80 deposit based programs and what the best fit for both travel and financial reasons.