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The Super-Rich Are Being Scammed on Their Private Jets

A jet owner found himself charged $5,300 for 240 sushi boxes apparently served on board his jet while it was empty. 

The Super-Rich Are Being Scammed on Their Private Jets
Attendees climb the airstair to a Bombardier Inc. Global 6000 business jet on display during a media event at Seletar Aerospace Heights in Singapore. (Photographer: Nicky Loh/Bloomberg)

(Bloomberg) -- Five grand for mystery sushi. Seven for plastic cups. And more fuel than the plane could possibly hold.

Such are the deceptions stinging the billionaires and mere millionaires of today’s private jet-set class. In an era of ultra-wealth, reports of shady billing related to private-jet travel are on the rise.

The Super-Rich Are Being Scammed on Their Private Jets

It says as much about this era of hyper-wealth as about modern-day fraudsters. So much money is sloshing around the world that, inevitably, crafty operators are seeking a slice, trying to help themselves to what they figure is a mere rounding error to a billionaire. About a third of private-jet owners are worth more than $500 million, according to a 2018 report by VistaJet and Wealth-X.

Some fraud attempts are almost comical. One jet owner found himself charged 4,000 pounds ($5,300) for 240 sushi boxes apparently served on board his jet while it was empty, according to My Sky, a company whose software helps scrutinize and manage private-jet costs. Another was charged 6,000 euros ($6,800) for plastic cups after the provider mistakenly added two zeros to the invoice. Still another customer’s refueling bill ended up exceeding the capacity of the plane’s fuel tanks by more than two tons.

Keeping Track

Part of the problem is the sheer quantity of paperwork and bills associated with private air travel. One flight can generate dozens of invoices, for fuel, food, over-flight permissions, airport fees, on-ground services, crew hotels, re-positioning flights and maintenance. And every trip is different. That makes it hard for globetrotting billionaires to keep track.

With complex assets like jets and yachts, “there is a tendency for people not to understand the cost structure, so if someone puts an invoice in front of them, they’ll sign it,” said Mike Brodsky, a managing director at Deloitte Financial Advisory Services.

It’s not clear whether such attempts to overcharge are becoming more prevalent or simply more visible in today’s world of social media and technology. While there’s no precise accounting of the amounts lost through inefficiency and fraud by ultra-wealthy households, they likely run into the billions of dollars a year.

“Any numbers out there about the amount of fraud against ultra-high-net worth people is understated, because many people won’t admit to it,” Brodsky said.

There are 21,000 business jets worldwide, which cost their owners about $32 billion to run. This sum can be decreased by a quarter if operations are optimized, My Sky estimates.

One jet broker, who asked not to be identified when talking about potential customers, said he’s seen evidence of overcharging and that it’s common for jet owners to fall out with their management companies.

The Super-Rich Are Being Scammed on Their Private Jets

Some aircraft operators now say that providing transparency has become an essential selling point.

“All our negotiations are focused on getting the best fares for our aircraft owners,” said Bjorn Naberhuis, vice president for business development at Global Jet Concept, adding that their clients can find invoices on its online portal and review cost breakdowns. “The owners and their family offices are getting more and more educated and understand more and more about this market.”

But frustration remains high with the industry. A chief operating officer for a large family office, who didn’t want to be identified discussing private business arrangements, describes jet management companies as “a necessary evil” and recently switched to a new one. The old company gave him information that was disorganized and hard to review, and didn’t try to get him the best pricing, he said.

“It’s an absolutely nontransparent market,” said Kirill Kim, co-founder of My Sky. “You can’t control any of your costs.”

--With assistance from Benjamin Katz.

To contact the reporters on this story: Alex Sazonov in Moscow at asazonov@bloomberg.net;Tom Metcalf in London at tmetcalf7@bloomberg.net;Suzanne Woolley in New York at swoolley2@bloomberg.net

To contact the editors responsible for this story: Pierre Paulden at ppaulden@bloomberg.net, Steven Crabill, Peter Eichenbaum

©2019 Bloomberg L.P.