Qatar Airways Takes a Stake in a Small California-Based Airline

Less than a year after Qatar Airways was rebuffed in an attempt buy a minority share of American Airlines, the gulf carrier has won a much smaller prize, a slice of a California-based company called JetSuite backed by JetBlue that has been dabbling in the airline business.

JetSuite began more than a decade ago as a private jet company, mostly shuttling wealthy passengers on small, lightweight four and six-seat jets around the western United States. It is still in that business and has been growing it, but increasingly, JetSuite has been investing in what is essentially its own airline, albeit one with an unusual model. 

It is called JetSuiteX and it now operates five 30-seat Embraer E135s on the West Coast, mainly in California and Nevada, with plans to add two more jets by summer. JetSuiteX uses smaller airports, such as Burbank, near Los Angeles, and Concord in northern California, and operates from private air terminals, rather than passenger terminals. The product is classified as a public charter and, as a result, passengers do not need to clear traditional security. Prices are often comparable to a first-class ticket, or a last-minute walk-up coach fare.

JetSuite said Tuesday that Qatar Airways would take a minority stake in JetSuite, with its investment extending to JetSuiteX. JetBlue has also been an investor in JetSuite and on Tuesday, JetBlue said it would increase its stake.

Terms or ownership stakes were not disclosed, but JetSuite CEO Alex Wilcox said in an interview that Qatar's investment complies with foreign investment laws for U.S airlines. Investors like Qatar Airways can hold no more than 25 percent of voting shares and no more than 49 percent of the total economic share.

"It's a game changer for us," Wilcox said. "We are thrilled about the additional capital and we can expand and have a partner that appreciates the passenger experience."

Qatar Airways is a major investor in other airlines, but its targets are often much larger than JetSuite. Most notably, it owns 20 percent of International Airlines Group, which controls British Airways, Iberia, Aer Lingus and Vuelin, and 10 percent of LATAM, the South American airline. Last year, the airline at first wanted to buy 10 percent of American and later halved its proposal, but walked away after American CEO Doug Parker called the proposal "puzzling."

JetSuite had no such qualms. The company said the money not only will help it expand its private jet business but also will help the public charter airline expand in the Western United States and beyond. For now, all of JetSuiteX's routes depart or arrive from California airports, with most routes 500 miles or fewer.

Rachel Porges, JetSuite's vice president for marketing, said JetSuiteX could expand to the East Coast, perhaps at secondary airports near Boston, New York and Washington, D.C. It could even fly to Florida, she said. "Anywhere that there are underserved, overcrowded and frustrated travelers in airports, we think this model works," she said.

That model is highly unusual. It is essentially an airline, but it sells a private-jet style experience, and passengers can arrive as late as 15 minutes before departure. The airline is permitted to operate without traditional security screening because of federal regulations covering some airlines with 30 or fewer seats. When these planes flew as American Eagle, they had 37 seats.

The company plans to add six to 12 airplanes for year for the foreseeable future for the JetsuiteX fleet, Wilcox said. And with the new investments, it should have enough money to pay for its growth, Porges said.

"This is is sufficient funding to really facilitate growth on both Jetsuite and X for the foreseeable future," she said. "We don't think we are going to raise additional capital soon or anytime ever."