CEO Interview: Start-up ClipperJet wants to fly G4s between New York and L.A.

ClipperJet wants to fly passengers between L.A. and New York with an unusual business model. Photo: ClipperJet. 

ClipperJet wants to fly passengers between L.A. and New York with an unusual business model. Photo: ClipperJet. 

Do you want to regularly fly on a corporate jet between Los Angeles and New York for an "affordable" price?

A new company called ClipperJet could be your ticket to the good life. For a monthly membership fee of $9,700, ClipperJet will allow you to take four one-way flights each month between New York and L.A. You'll have have a chance to take more flights for the same price, but you'll have to fly standby on those. 

Your ride? A 14-seat Gulfstream IV, better known as a G4. If all goes according to plan, ClipperJet will fly passengers once per day in both directions, beginning in April. 

I recently spoke with ClipperJet CEO James A. Occhipinti about his plans for his company. Keep reading for a slightly condensed and likely edited version of our conversation. 

Brian Sumers: Can you describe your business model?

James Occhipinti:  The business model for ClipperJet is relatively simple though somewhat revolutionary in the corporate jet world. What we are trying to do is bridge the divide between the fractional jet card world and the first class cabin on American, United and Delta. It's no secret that transportation in the airline world has been the most dreaded part of human existence, certainly for the traveling public. A lot of the imposed lines and waiting and dealing with crowds and delays and waiting for bags have filtered up into the premium cabin class cabin as well.

How will your system work?

We think we can provide a far greater value at roughly the same price point on a monthly basis as someone pays in a premium cabin. We are calling it a country club relationship model. What I have done is established a membership base of 90 people in the Los Angeles area and 90 people in the New York area. If you have a monthly subscription, it will be just like a country club. You can use it once or you can use it many times, for roughly the same cost. With the 90 members in each city, I am able to facilitate the costs of running the air operation. 

When and how will you start flying?

We are not flying yet. We are going to be flying in April. The schedule will be dictated by the member group. We will have a member board established by two members in New York and two in Los Angeles. Presumably, we will have a morning departure at around 8 a.m. from Los Angeles and an evening departure from the East Coast at 6 p.m. 

Just once per day in each direction?

Yes, we'll do one turn, or 10 hours of flying. We are buying two aircraft initially. We are not going to call the second one a spare. Gulfstreams weren't designed to fly this many hours regularly, so we'll rotate the two aircraft around the maintenance schedule. 

What did you choose the G4?

The Gulfstream is a very large corporate jet. It is a complete standup cabin. it's 6 feet 2 inches. With the captain's chairs and the size of the cabin, it is really not a problem for a full load. We will be running with 14 seats. That will give better than first class accommodations for everyone on the airplane.

Do you need to fill the airplane every day? Do you worry it will fly empty sometimes?

No. If you really look at our membership relationship and the way our business model looks, it doesn't matter how many people are on the airplane in the same way Netflix doesn't care how many movies you watch per month. With our business model, passengers are paying monthly dues to be part of the membership. What that guarantees them is four one-ways per month, or two roundtrips. After they have exhausted those four one-ways, I can't continue to guarantee it because the math doesn't work. But we offer a 24-hour standby, and if there is a seat available, they can fly.  

Passengers may not love American, United, Delta, JetBlue and Virgin America, but they all fly coast-to-coast more than once a day. Are you worried flying only once per day will be a problem?

As we grow, we are going to have a few more frequencies. We will be able to compete with them to some degree. But we are not for everybody. if someone needs the flexibility of 11 or 15 flights per day on one airline, or 30-35 flights per day on all airlines, then we are probably not for you. What we want to do is be very good for those who see value in what we do.

Are you still selling memberships? (Asked in January 2015)

We are still selling. We are rapidly reaching a point where we are going to hit a waitlist. But that is OK because a wait list means that we are going to add frequency quicker.

How did you decide your price?

it was really a math exercise. I took a look at our costs, like fuel burn and aircraft acquisition. I used a $4 baseline for fuel and then added a margin for profit.

Will there be catering?

The standard meals are not going to be the typical rubber chicken or mashed potatoes that you get on an airline. What we will do is very nice, very well presented heavy hors d'oeuvres -  the wontons, the shrimp cocktail. For the breakfast, we are going to be doing granolas and yogurts.  In the evening, we will have baked chocolate chip cookies. In the morning, we'll have baked cinnamon rolls. 

Is there a fear that some flights will be oversubscribed?

Here's how the math works. I have 80 members in each city and only 14 seats. It is the same math exercise that a country club has to deal with at Saturday morning at 8 a.m. when everyone wants the same tee-time for golf.  It is a first come, first served. What I do guarantee for those first four one-ways is that the member will have access to the airplane within seven days. If you want to fly tomorrow you might not get on the airplane because it is a Monday morning flight. We anticipate the Sunday, Monday and Friday traffic will be very heavy. We anticipate our load demands will be similar to in the airline industry.