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?
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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. But OneJet scamming investors and airports instead of customers?
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.
Verdict?
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: Review: Pittsburgh to West Palm Beach on OneJet
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?
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I took One Jet 4 times. It’s was a Great flight. Iam really sad to see them go. The planes , pilots and booking. All did a great job! Pittsburgh to Hardford.
I wish they weren’t going either, but their growth was erratic and unsustainable. I recall that they had routes opened and by the time I told someone about them they would be closed down or never started at all.
Ultimate JetCharters is based in Akron Ohio, not Indianapolis Indiana.
Sorry, I had seen a previous report listing routes from Indy for their scheduled service division, Ultimate Air Shuttle. I’ve updated accordingly.
It wasn’t a scam for the people on the ground. Mr Maguire took a very solid idea and let his imagination get the better of him. He had a very solid staff behind him from reservations to those in the airports. They were customer focused and the customers themselves really enjoyed the service (until it began it’s crash landing). I really think if he hadn’t gotten greedy and his number 2 had known what she was doing, they would have kept going maybe even flourished. Sadly, that didn’t happen. He owes a lot of people money including the employees that stuck it out to help passengers get their money back. What an unfortunate situation all around.
I appreciate your genuine feelings around the matter and feel for those who were caught supporting the airline past the point in which they could still be paid. As you may have read in previous reviews (linked throughout the post), I loved the airline and had great experiences on flights to Louisville, Milwaukee, Omaha, and West Palm Beach. But toward the end, actions spoke louder than words, ambition overtook considerate planning and the carrier wrote checks it couldn’t cash. I don’t think anyone on the ground serving customers or in the air flying them was out to hoodwink anyone, but in the upper levels of management there had to be a point where they had accrued $7MM in revenue last year, $5MM this year and still tried to fundraise to buy another carrier.
What is the latest up date on One jet
In litigation I believe.
As a former GM of one of the cities, I felt swindled to be very honest. Deceived and left trying to explain to airport ops why they hadn’t been paid when my city suddenly got shut down. I felt horrible for my many regulars that counted on us and believed in us. To this day I’m angry. We were conferenced in on a phone call (approx 20 or more of us, told our cities were closing thanks for your service, goodbye.) I was in another city, Buffalo to be exact, 2 weeks in opening up the Bud-Albany connection and training staff. Just like that in a city far from home dumped from my job, no real explanation just goodbye good luck. I’ll never forgive or forget what was done to me, fellow General Managers, my agents and our airports that were screwed out of overdue rent, and other fees. Too much. Unfair uncalled for and yes upper management knew.
Amen. As a former Mgr in one of the airports that stuck it out to the end of my airport…. fighting to get them paid… but truly believing in the company the idea… the wonderful passengers … all of it hurts many of us. I don’t believe it was a scam just unfortunately trying to grow too fast and it backfired.
I’ve heard a lot about Matt Maguire in all this, but who was his “number 2” you reference?
I think you kind of answered your own question: “But toward the end, actions spoke louder than words, ambition overtook considerate planning and the carrier wrote checks it couldn’t cash.” This to me doesn’t sound like fraud, but a case of…ambition causing a reasonable business plan to morph into something unsustainable, which then spirals out of control. It’s not an intent to defraud. Rather, more like the sunk cost fallacy at work, where the entrepreneur convinces himself and others “we just need another million to turn this around!” and incurs more costs convinced the turnaround is just around the corner, instead of cutting bait.
Agreed. There’s a big difference in intent to defraud and just shooting too high. And I think you also answer your Q by pointing out how little he made… who goes through the trouble to make a few hundred thousand? If you’re gonna do it, do it big.
In any case, deference to business judgment is going to trump any fraud claims… it operated and was enjoyed by customers. Just didn’t work, throwing around fraud like that isn’t right.
As someone who was very closely associated with the airline, there were certain things that we had questions about. We were told things by Matt Maguire that never planned out, or were complete lies. I don’t think any of us could have imagined that there was so much money that Maguire had acquired from investors that went straight to his pocket. I don’t know how he could have thought that he could get away with not paying vendors and leaving employees high and dry. The idea itself is something that was and still is sorely needed in the industry, and it’s a shame it ended up this way. What was going on behind the scenes was likely scammy, but for those who lived and breathed it everyday, we believed we were on to something good. There was a wealth of aviation knowledge within the management of OneJet, excluding Matt Maguire. Had those who had that knowledge been aware of what was going on sooner, I think we wouldn’t be having this discussion right now.
790SS – let’s be honest, you were not “closely associated”, you worked there, barely a year. To think you could have saved the airline is ridiculous.
Please explain your comment just maybe you can help all involved
The comment made was easy to understand.
I loved One Jet. Flew on them a few times from MKE to PIT. Sorely needed service. The cost was reasonable and everything was great. Sad to see them go. Hope someone comes in and pick this market up.
I used them early on going to Indy, MKE and SDF, but soon encountered repeated issues with cancellations – often with little or poor communication. As a result, I followed this story extensively as it was developing until their collapse. I wanted it to succeed, but it’s pretty clear this was a scam from the start. The magnitude of the loss/liabilities (especially in light of unfulfilled destination schedules) in comparison to assets (zero) makes it pretty obvious how over leveraged this scheme was. A kind heart may attribute this to mismanagement or poor judgement, but when it’s pretty clear now that the CEO knowingly made false statements of every sort to airport authorities, investors, auditors, you have to face the truth. The CEO didn’t just oversell or embellish, they committed fraud. Lying about your own investment stake is the ultimate form of fraud, when you are soliciting investors. The recent tally of 43 million in liabilities does not include pending litigation, according to the Pittsburgh Business Times – a viable enterprise which was simply mismanaged or guilty of poor decisions, with millions in subsidies from various entities, would simply reorganize – not collapse with tens of millions in debt.
Like with many scams, some of the victims are wealthy investors who got a bit greedy. But unfortunately it also hurts many innocent workers and govt boards who trusted the Maguires. Lots of time and money will be spent trying to legally resolve this, millions will never be recovered or accounted for, and the Maguires will mysteriously be able to maintain a comfortable lifestyle.
What is the latest information on One Jet?
They remain in litigation I believe. No routes flying.
I bought a OneJet ticket once. The flight was cancelled at the last minute. I spent 6 mos fighting to get my money back for the cancellation, it never happened. “Scam” sounds about right.