Sentient Jet thrives in down economy

 - November 23, 2009, 6:46 AM

Since Sentient Jet was purchased by Macquarie Global Opportunities Partners last September, the company has returned to its roots, according to CEO Steven Hankin. Business is down, he concedes, but the slumping economy has forced business travelers to avoid owning capital assets–and therefore moved them toward purchasing jet cards. Sentient sells jet card memberships, brokers charters and operates a contract fuel business that helps operators that do business with Sentient save money on fuel costs. “We’re the only national non-fractional jet card business,” said Hankin.

Sentient was part of JetDirect Aviation until it was sold to Macquarie last year after JetDirect began having financial problems. Sentient was a standalone business until it merged with JetDirect in April 2007. Earlier this year, Sentient merged its fuel program with Everest Aviation Resources to create Everest Fuel Management. Year-over-year, all three of Sentient’s business segments have grown, Hankin said, and the company has added to its sales force during the past year to handle its growing business.

Contributing to Sentient’s recent success is a corresponding decline in business at fractional-share operators, according to Hankin. Buyers of fractional shares are opting for jet cards, he explained, because of the huge drop in residual values of fractional shares, the inflexibility of share ownership when the owner doesn’t want to fly and the high cost of flying fractional shares. Sentient has seen many former fractional share owners buy jet cards. That number is “higher than it’s ever been,” Hankin said. “There’s a real hesitancy to buy fractionals. People are hesitant to buy iron.”

Sentient and other charter brokers are also in a good position now because the decline in the charter market means that there is an overcapacity of high-quality aircraft available for charter, according to Hankin. He estimates that more than 60 percent of all charters are broker-arranged. Sentient has been able to keep charter costs down by buying charter inventory and guaranteeing pricing and availability for one-way trips, taking on the risk that it won’t be able to fill an empty seat on the return trip. According to Hankin, “80 percent of the time we make money.” About half of the trips that Sentient buys from charter operators are for a discount on the fixed price, he said. “We believe we can buy on behalf of the customer better.”

Hankin is happy that Sentient separated from JetDirect before that company shut down and went bankrupt early this year. JetDirect tried to integrate a dozen charter companies, which proved too unwieldy and caused wrenching financial losses. “Operating aircraft is hard,” he said. “The business books say ‘stick to your knitting.’ I’ve learned what that was.”