12 Apr 2018 – 12:20
Bloomberg
JetSuite, a small charter airline that offers scheduled service up and down the West Coast, plans to expand its public face with a fleet of regional jets that will eventually grow to 100.
The expansion of its public charter, JetSuiteX, will be funded in part by investor Qatar Airways and an expanded stake sold to JetBlue Airways Corp, which became a minor JetSuite investor in 2016. The company also plans to relocate from Southern California to the Dallas-Fort Worth area this summer.
Qatar Airways has invested in several major airlines, from Italy to London to Hong Kong. In August, the carrier ended its effort to acquire 10 percent of American Airlines Group Inc after the world’s largest carrier rebuffed its advances. Federal law limits foreign investment in a US air carrier to 25 percent. None of the companies involved in the JetSuite deal disclosed the size of their investments.
JetSuiteX began flying scheduled service in April 2016, using 30-seat Embraer SA 135 regional jets. The company employs private air terminals in California and Las Vegas, allowing travelers to bypass larger airports and congested terminals. One-way fares begin at $129.
“We are like a pimple on the gnat on the back of the elephant.”
JetSuite was founded in 2009 by Alex Wilcox, the third employee recruited to JetBlue by that carrier’s co-founder, David Neeleman, who also serves on the board of JetSuite. Tony Hsieh, the chief executive officer of online retailer Zappos.com Inc, is also a JetSuite director. JetSuiteX will add two jets to its fleet of five by July (the private-charter half of the business has 22 planes), and plans to expand to 100 Embraers by 2023 or so, Wilcox, who serves as CEO, said.
The carrier is still examining destinations for its planned eastward expansion. The Qatari investment will be sufficient to help fund future growth without seeking additional money, Wilcox said.
In the future, the company may float some shares publicly, but it faces no financial pressure from investors seeking near-term returns, he said. Even with 100 30-seat jets and $1 billion in revenue, “we are like a pimple on the gnat on the back of the elephant of the industry,” he said.
“Our investors are both strategic, as in JetBlue and Qatar, and long-term family-office money,” Wilcox said. “They want us to invest all of the proceeds into the business and to grow it.”
The company is decamping from Irvine, California, near the John Wayne Airport, to Dallas; Texas offers lower costs and a larger aviation infrastructure, thanks to American and Southwest Airlines Co, Wilcox said. The move also will help the company further distinguish the two sides of its business, working in separate offices as JetSuiteX grows into the larger half of total revenue, he said.
