As a travel blogger based in Pittsburgh, OneJet was a great story, but now that is has filed for bankruptcy was it really just a scam after all or a good idea gone wrong?
What Was OneJet?
OneJet was one of the most innovative approaches to an airline concept I had ever seen. The airline sold individual seats on small 6-8 seat private jets with scheduled service for prices between traditional first class and coach. They focused on nonstop flights from Pittsburgh (where some incentives for new service existed) to business destinations without scheduled service on nonstop routes.
For travelers like myself, getting from Pittsburgh to Milwaukee can be an ordeal. Either I fly to Chicago, rent a car and drive, or I take a connection. Driving would take around nine hours each way and eat up three days for an otherwise one-day business trip. With OneJet, I could fly nonstop over the Lake Michigan and land in under 50 minutes.
At one point, their network expanded from just a handful of flights to around a dozen.
OneJet Files Bankruptcy
Over the last week, I saw reports that OneJet had filed for bankruptcy in a haphazard way. Documents were filed incomplete, creditors were listed without amounts – it was poorly done, and it was apparently executed by CEO, Matthew Maguire. After OneJet had botched the acquisition of Akron-based Ultimate Jet Charters, they reduced service from Pittsburgh to just two cities and Pittsburgh International Airport (or their parent company, Allegheny Airport Authority) sued them for $750,000.
It was a sign of the beginning of the end.
The Business Plan Was Suspect But Could Have Worked
I reached out to the CEO when I discovered the service for three reasons. 1) I wanted to understand the business model and how they could possibly make money with their plan. 2) I wanted to see what the plans for expansion of the carrier could be. 3) I had a friend of a friend that had invested in the carrier and wanted to see if his money was in jeopardy.
I was as shocked as anyone else would have been that the business plan actually seemed sound. When I assumed the cost of fuel (Jet-A) was about $5-6/gallon at the time, there is no way the business could make money. But because of the massive amounts consumed by airlines, the cost of purchasing fuel through the airport commercial pool reduced it down to $1.50/gallon, which made the service possible.
Mr. Maguire discussed expansion plans and they seemed realistic. He focused on well-researched O&D traffic markets and only needed to sell a handful of seats in each direction on any given day to fill planes. The markets were just far enough that executives would waste their time by driving. No nonstop service on most of their routes existed meaning that when adding connections it took nearly as long to fly. That also resonated with me.
It Feels Like a Scam Now
I can’t say for sure why the carrier went from a few routes that seemed to be growing to an attempted merger with Ultimate Jet Charters. The rapid expansion following, including the use of massive ERJ 135/145s (huge for their service), feels like the exact opposite approach to take. That’s an easy observation for an armchair CEO to make.
The Pittsburgh Business Times notes that the carrier lists no assets of size, despite a $43 million bankruptcy. I am sure the writer expected to see some airplanes on the books for an airline, a fair assumption for an outsider to make. But leasing the aircraft makes sense, it’s a common activity and when carriers struggle they can quickly downsize without parking or selling assets.
The article also stated that CEO Matthew Maguire made several hundred thousand dollars and had reimbursed expenses that brought the total outlay close to a million. It doesn’t suggest that he was swindling investors, but the inclusion of his pay and expenses leads readers down a path.
If it was a scam, then Maguire could learn a thing or two from Bernie Madoff; making off with less than a million just doesn’t seem very efficient. However, the flailing style of expansion and use of incentives that the carrier had no intention to repay seems unwieldy at the very least.
What makes OneJet feel most like a scam to me, is that they didn’t go out and have a bank finance the business from the start. They collected investment in $100,000-150,000 chunks from investors who had done well for themselves but expected a return of a certain percentage that OneJet would not have been able to deliver even if they were wildly successful.
It seems like OneJet started out as a good idea but quickly got out of hand for the management staff. Individual investors picked up a substantial portion of the tab. That leads me to believe that what started out as a genuinely good concept, became a scam over time. It’s unfortunate it went this way for everyone involved, including the traveling public.
Read More: Interview with Matthew Maguire
Read More: OneJet Pittsburgh-Louisville
What do you think? Was OneJet a genuine idea that just didn’t work out? Was it a scam from the start? Did you fly the carrier? How was your experience?