Scottsdale , AZ headquartered Set Jet was founded in 2014 and launched its by-the-seat jet charter membership model in 2019. It had been aiming to go public via a SPAC deal, but when this new funding wasn’t consummated, it closed its doors and ceased operations.

Business Model

Set Jet was one of several companies offering individual seats on private aircraft. Under the Set Jet model customers paid a $100 per month membership fee and then paid as little as $750 per seat.

Set Jet members were limited to chartering flights between established city pairs with the charter aircraft based in the Scottsdale, AZ and Las Vegas, NV hubs. The city pairs consisted of:

  • Scottsdale, AZ and San Diego, CA
  • Scottsdale, AZ and Los Angeles, CA
  • Scottsdale, AZ and Orange County, CA
  • Scottsdale, AZ and Cabo San Lucas, Mexico
  • Scottsdale, AZ and Las Vegas, NV
  • Scottsdale, AZ and Salt Lake City, UT
  • Scottsdale, AZ and Aspen, CO
  • Las Vegas, NV and San Diego, CA
  • Las Vegas, NV and Los Angeles, CA
  • Las Vegas, NV and Orange County, CA
  • Las Vegas, NV and Cabo San Lucas, Mexico
  • Las Vegas, NV and Salt Lake City, UT

The membership model allowed a member to book a charter flight and generally Jet Set would provide that flight even if no other members joined the flight. In other words, a flight might have just one passenger paying only $750. This is way below the cost of operating a flight on any of the above routes and wouldn’t even cover the cost of fuel, so the company could easily find itself flying loss making flights.

In its filings as part of the attempted SPAC merger Set Jet said that it had over 3,000 active members as of June 30, 2023. About 50% of these members were from the original Scottsdale, AZ base hub. In the period from January 2020 through June 2023 it says there were over 32,000 member passenger seats filled on over 6,300 member chartered flight segments. This averages out to 5 passengers per flight.

If those 5 passengers are paying $750 each, that generates revenue of $3,750 per flight. That’s still far too low to make a profit, which shows in the financial results discussed below.

Aircraft

Set Jet didn’t own or operates any of the aircraft. Rather it worked with charter operator partners to provide aircraft, pilots and related aircraft services for member charters. Set Jet also provided cabin hostesses for each flight and its ground operations personnel assisted member travelers with their charter journey.

Set Jet entered into multi-year charter agreements with a third-party charter operator to ensure that specific aircraft were available for members to charter seats on flights.

The core member charter fleet consisted of five Bombardier Challenger 850s, with seating for 13 to 16 passengers in an ultra-luxury private configuration. Note this plane is based on Bombardier's 50-seat commercial jet the CRJ200. It also had access to other charter aircraft.

SPAC

In July 2023, Set Jet had announced it planned to merge with Revelstone Capital Acquisition Corp. (NASDAQ: RCAC) and expected to close this deal in the fourth quarter of 2023. But the vote for approval kept being delayed and has now fallen through. The deal would have brought new funding into the company.

Risk Factors

The SPAC filings with the Securities & Exchange Commission (SEC) says “Set Jet has incurred significant losses since its inception, expects to incur losses in the future, and may not be able to achieve or maintain profitability.”

And goes on to say “there is substantial doubt about Set Jet’s ability to continue as a going concern, and Set Jet may need additional financing to execute its business plan, to fund its operations and to continue as a going concern.”

Consistent Losses

The financial results in the filing confirm the comments above, as they show Set Jet had a loss of $7.1m for the six months to 30 Jun 2023 on revenue of just $7.0m. In the years prior to this, Set Jet had revenue of $12.9m in 2022 and $9.5m in 2021 and made losses of $21.4m and $12.8m. So, it has been consistently heavily loss making.

Set Jet closing

Company Closing

The message on the Set Jet website (shown above) simply reads “Due to unforeseen changes in our aircraft availability, compounded by challenges in finalizing our public offering and securing necessary funding, Set Jet is faced with the unavoidable reality of ceasing all service operations, effective immediately.”

And, in regards to memberships and flights it adds:

“Cancellation of Active Memberships: All current active memberships will be automatically canceled, effective immediately, and any upcoming membership billing periods will not be charged.

Cancellation of Booked Flights: Any flights booked beyond today's date are regrettably canceled. We extend our sincerest apologies for any inconvenience this may cause.”

Lessons to Learn

If you are looking to fly privately, the lessons from this story are the classic “if it’s too good to be true then it probably is.” No operator can build a sustainable business if they are making $750 per flight or even $3,750 per flight. Super-mid size jets like the Challenger 850 cost significantly more than this to operate. When you are looking at private aviation options if the price seems incredibly low, compared to other operators, then ask some detailed due diligence questions about the profitability and long-term sustainability of the provider. This becomes much more important if you are putting down hundreds of thousands of dollars on say a jet card or millions of dollars on a fraction. There are plenty of providers who have very sound business models.

The good news in this case is that members would not have lost huge amounts of money, because they were only paying a monthly $100 membership. Some will have lost more money at the end when flights were abruptly cancelled, but again this is measured in hundreds of dollars rather than hundreds of thousands. And for those members who were long terms users and took lots of flights they were getting a phenomenal value for a low price – but the party couldn’t continue.

Private jets cost millions of dollars to buy, up to $80m for new long-range jets. They also cost millions of dollars a year to operate if they are being used heavily. A few hundred dollars per seat won’t cover this.

Over the years there have been several examples of entrepreneurs, sometimes from outside aviation, starting new private aviation companies and promising a new model with much lower pricing. The reality is that private aviation is expensive. Don’t believe anyone who tells you otherwise.