Troubled start-up airline OneJet suspends flights

Key Points
  • OneJet, founded in 2015, is suspending operations, facing a lawsuit over a $1 million airport subsidy to expand.
  • The airline had planned new routes in hopes of capturing business travelers for FedEx and other companies.
One Jet plane.
Source: One Jet

Less than four months ago, start-up airline OneJet announced it was buying a charter operator to more than double its flights to 400 a week. This week, OneJet suspended all operations.

The operator of Pittsburgh International Airport this month sued the three-year-old company, which has a base at the airport, alleging OneJet did not fulfill the requirements for a $1 million incentive it gave the airline to expand its operations. Rick Pawlak, managing director of Ultimate AirShuttle, a unit of Ultimate JetCharters, a charter company based at the Akron-Canton Airport in Ohio, told CNBC it terminated its acquisition agreement with OneJet and it has stopped flying for the upstart.

CEO Matthew Maguire founded OneJet in 2015, going after business travelers for companies such as FedEx in midsize cities that large carriers retreated from in a wave of megamergers over the last decade.

The turmoil highlights the difficulty and complexity of operating and expanding an airline, particularly as rising costs for even the world's largest airlines are taking a bite out of profits. Four carriers control some three-quarters of the U.S. market, and corporate travelers tend to fly on large airlines since they offer many more flights and business-class travelers' plans often change.

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OneJet had been flying on an operating certificate held by Ultimate JetCharters. OneJet is now pursuing its own certificate from the Federal Aviation Administration and will suspend scheduled services during that process, Maguire said. "The result of this transition will be a more robust and reliable operation for our customers from the fourth quarter forward." He did not immediately comment on the lawsuit or the company's financial health.

Henry Harteveldt, founder of the travel consulting firm Atmosphere Research Group and a former airline executive, said the damage could be lasting.

"When an airline exits a market it loses credibility with the traveling public," he said. "I wonder if we ever see OneJet take to the skies again."

Some OneJet customers complained about canceled flights and difficulty in getting money back. In an interview this spring, Maguire said: "Certainly, when you're growing an airline, there are growing pains."

OneJet isn't the only upstart that has been trying to scoop up well-heeled passengers in smaller airports. JetBlue has invested in JetSuite and is selling seats aboard its scheduled West Coast charter service JetSuiteX. On the other end of the spectrum, JetBlue's founder, David Neeleman, is exploring starting a new low-cost airline.

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