Plummeting oil prices are turning out to be a boon for private jet aficionados.
In order to reflect the lower price of oil, private jet charter company Magellan Jets announced it is cutting fees for all membership contracts made after Jan. 15 by 16 percent.
The cost of Jet A, a type of fuel used by private jet aircraft, fell 7 percent to 9.5 percent in the past 12 months, based on research conducted by Jet Advisors, private jet brokerage and research firm. Magellan anticipates this trend to continue as the retail market catches up with wholesale oil prices.
The company expects it will incur short-term losses due to the membership cuts because the membership discount far exceeds what the company is managing to save from cheaper fuel costs, said Joshua Hebert, Magellan Jets CEO. For instance, a new member card for 25 hours on a small jet has an hourly fuel rate of about $600 per hour. While this hourly rate will be cut by 16 percent, the fuel rate has only fallen by 7 to 9.5 percent.
Hebert said he believed cutting membership rates by the exact amount saved from cheaper jet fuel would not be low enough.